US pension funds have become key players in raising global reinsurance capital, as they chase comparatively high returns from catastrophe bonds.

Their investments are a significant development because they are longer-term than the hedge funds that generally make quick entries and exits from reinsurance markets, a recent Casualty Actuarial Society seminar heard.

Pension funds can earn 7% a year from a catastrophe bond and 2% on a treasury bill, US property and casualty equity analyst Meyer Shields told the meeting in Bermuda.

“Their outlook is much different. They don’t need double-digit percentage returns.”

While there is plenty of reinsurance supply and reinsurers have obtained price increases, there has been comparatively low growth in demand, the seminar heard.