Catastrophe bonds, the firm said, constitute a very small part of the securitization business, being surpassed by traditional reinsurance as a source of capital to cover natural-hazard catastrophe risks.

However, RMS said that the pace of innovation within this niche increased in 2003 with the completion of three deals that addressed new types of risk.

The company noted the Golden Goal Finance Ltd. coverage against cancellation of the 18th FIFA World Cup scheduled to be held in the summer of 2006 in Germany. The coverage for the international soccer tournament, RMS said, was the first securitization to cover terrorism risk, in addition to natural perils. It was also the first to cover risk to a sporting event, according to the company.

RMS also reported that RMS Vita Capital Ltd, issued on behalf of Swiss Re, covers catastrophic increases in mortality rates in the U.S., U.K., France, Switzerland, and Italy.

The catastrophe-indexed notes are linked to a rise in mortality from any source, including epidemics, natural disasters, war, or terrorist attacks. This was the first insurance-linked security relating to life insurance risk, RMS said.

According to the firm, the most recent securitization deal, placed in late December, saw Pylon Ltd. securitize damage from windstorm for a major European electricity supplier. This was the first securitization to cover transmission and distribution risk, and the first for a European corporate, RMS said.

By RMS's count, catastrophe securitization volumes since 1999 have averaged about $1 billion each year. RMS said a volume increase in 2003 to $1.8 billion was driven by a larger average transaction size, with the total number of transactions remaining flat.

Of the seven deals made public during 2003, RMS said it provided the risk analysis for three, including Golden Goal Finance Ltd., Pylon Ltd, and Formosa Re, a securitization of earthquake risk by the Taiwan Residential Earthquake Insurance Pool. RMS said those three deals totaled about $600 million.

Gordon Woo, an RMS risk consultant, said that "the innovative securitizations seen in 2003 demonstrate that new perils and lines of business can be effectively quantified for investment purposes, and that the capital markets are willing to provide alternative financial coverage."

More than 400 insurers, reinsurers, trading companies, and other financial institutions use RMS models to quantify, manage, and transfer risk, the company said. More information is available on line at www.rms.com.