Largest deal was Chubb's East Lane Re IV

Cat bond issuance hit a record $1bn in the first quarter of 2011, following strong investor demand.

A report from Willis said although only four bonds were issued during the period, the record figure showed strong growth on last year’s $650m issuance for the same period.

The largest deal of the quarter was Chubb’s East Lane Re IV, which provides $475 million of indemnity protection against hurricanes, earthquakes, thunderstorms and winter storms in the northeastern U.S.

“It is likely that second quarter issuance will also be dominated by hurricane exposure as we move toward the 2011 wind season,” the report said.

Willis also said the full impact of the Japan earthquake on pricing for new catastrophe bonds remains unclear, but said that it expects some upwards pressure on risk premium levels for Japan earthquake risks going forward.

The report found that at the beginning of the quarter, there was downward pressure on risk premium levels driven by cash inflows into specialist cat funds.