As many as $2.2bn in catastrophe bonds could be issued in the fourth quarter of 2009, according to a report released today by reinsurance broker Guy Carpenter. This would bring the total issuance for the year to $4bn. In Q4 2008, the three months after the collapse of Lehman Bros, which had acted as a total return swap counterparty for many such bonds, there had been no new cat bond issues at all. Guy Carpenter noted that the market was recovering, with credit spreads narrowing. This made issues more attractive to insurers when compared with seeking standard reinsurance. David Priebe, Chairman of Global Client Development at Guy Carpenter, said that "given the increase in risk capital and the performance of the two bonds issued in the third quarter — both in terms of pricing and size — a fourth quarter that would account for more than 40% of the year's total issuance is not unattainable. Redemptions resulting from cat bonds maturing and a fairly light Atlantic hurricane season should also increase demand for new issuance". New risk capital issued in Q3 this year was 28.8% up on the same period last year, with two transactions that closed in July leading to $412m of new risk capital. There have been 11 cat bonds this year, although the $1.79bn raised is 33.5% lower than in the first three quarters of 2008. In Q3 $300m of risk capital matured, bringing the total maturity for the first three quarters of this year to $2.54bn. A further $660m is scheduled to mature in Q4 2009. After several consecutive quarters of declines, the total risk capital outstanding edged back up to $11.3bn in Q3 2009. If Guy Carpenter's prediction on issuance is correct, this would increase to up to $14.84bn by the end of the year.

US District Judge David Godbey, the Dallas judge in charge of the civil case against Allen Stanford, has ruled that Mr Stanford and other defendants in an alleged $7bn investment fraud can use a corporate directors' and officers' liability policy with Lloyd's of London. Judge Godbey said that "the court finds it in the interest of fairness to allow directors and officers to access insurance proceeds to which they are entitled for several reasons". Court-appointed receiver Ralph Janvey had asked that the Lloyd's proceeds be reserved for his use. Judge Godbey said that Mr Janvey's claim on the cover was hypothetical, since he had yet to file any invoices with Lloyd's. Lloyd's in its turn has filed that it intends to exclude Mr Janvey because the receiver has asserted that the Stanford companies were involved in fraud, which would void the coverage. Judge Godbey said that these were questions "for another day".

Luxembourg-based investment fund Volga Resources has agreed to acquire 54.1% of the share capital of Germany-based insurer Sovag from Russia's Ingosstrakh. Chlodwig Reuter, chairman of Volga Resources, said the acquisition was an important step for the group towards optimising its risk profile. "With Sovag as part of the group we see ourselves better placed to extend the scope of Volga's investments across a wider range of business opportunities. Sovag is an established and well-run business with good organic growth prospects," he said. The transaction has been cleared by German regulator BaFin, but is still subject to approval from the German Anti-Trust authority (Bundeskartellamt).  Sovag is headquartered in Hamburg . It generated gross written premium income of €90m ($132.9m) in 2008. The non-life insurer offers motor, fire risk and property insurance as well as cargo, marine, aviation and transportation insurance for corporate and retail clients.

The German insurance sector has criticized plans under which the Bundesbank would take control of insurance supervision. Jörg von Fürstenwerth, head of the General Association of the German Insurance Industry Gesamtverband der deutschen Versicherungswirtschaft (GDV), said that "if a reform of the German banking supervisory system is to be undertaken, then it is imperative that the supervisory bodies for the insurance and the banking sector remain separate". He noted that banks and insurers had "completely different business models", adding that "the insurance regulatory law has stood the test of the crisis and is in no need of any fundamental reform". Both the Christian Democrats, which performed well in the recent federal election, and their junior coalition partners the Free Democrats have members backing the merger of insurance supervisor BaFin and the Bundesbank. The proposal also has geographical implications, always a matter of significance in Germany. BaFin's insurance office is based in Bonn, while the Bundesbank is in Frankfurt. Any "takeover" by the Bundesbank would be a further setback for Bonn, which lost its status as capital after the recombination of West and East Germany.