A benign windstorm season has increased the appeal of catastrophe bonds to both sponsors and investors, with issued risk capital set to peak during the fourth quarter.

A report by Marsh & McLennan units Guy Carpenter and GC Securities reveals that newly issued risk capital increased 29% in the third quarter from the same period last year to $US412 million ($447 million).

It estimates issued capital in the fourth quarter will reach between $US1.2-2.2 billion ($1.3-$2.4 billion), a dramatic turnaround from last year when the market fell silent as the financial crisis took hold.

A total of 11 catastrophe bonds have been issued this year, worth a collective $US1.79 billion ($1.9 billion).

Worldwide catastrophe protection for the year to date is down 34% on the $US2.7 billion ($2.9 billion) issued at the same point last year, but a strong anticipated fourth quarter has led to a higher full-year estimate of between $US3-4 billion ($3.3-$4.3 billion).

Growing financial stability, a benign Atlantic hurricane season and positive perceptions of insurance-linked securities are expected to foster further demand for cat bonds.