NEW YORK (Bloomberg) — Catastrophe bonds, used by investors to bet against natural disasters, rose to the highest since 2005, the year of Hurricane Katrina, as the most powerful storms missed the US in the first two-thirds of the Atlantic season.

The Swiss Re Cat Bond Price Return Index rose 0.3 percent to 97.65 on October 1. The benchmark, which prices on Fridays, has advanced every week since mid-July.

The US and its oil and gas platforms in the Gulf of Mexico have escaped a direct strike from hurricanes this year. Fourteen named storms have formed this Atlantic season through October 1, three more than the average for an entire season, which runs from June through November.

"Investors are willing to take more of a risk than they were," said Brett Houghton, a fixed-income trader at Rochdale Securities LLC. "We're probably two-thirds of the way through hurricane season and there hasn't been a serious threat yet to the US mainland. It has not been a hurricane season that's problematic in an insurance industry context."

The Swiss Re index, which doesn't reflect interest payments, fell 6.6 percent in 2005, the year Katrina struck New Orleans. The hurricane killed more than 1,800 people along the Gulf Coast and caused levees in New Orleans to fail, flooding 80 percent of the city. It caused more than $40 billion in insured losses, the Insurance Information Institute said.

The index declined into the first part of the 2006 hurricane season, then advanced until November 2007 when it peaked at 97.6. Hurricanes Gustav and Ike in 2008, and the collapse of Lehman Brothers Holdings Inc., sent the bonds into a slump through the middle of last year. Funds from cat bonds were invested in asset-backed securities and Lehman was unable to meet commitments to compensate for losses on the holdings.

The benchmark has advanced about 9.9 percent from its low of 88.85 in June of last year.

"Pricing will continue to go up," Houghton said. "The supply-demand dynamic is in favour of a lot of additional demand coming into the market."

Insurers sell catastrophe bonds and use the funds to cover claims if a disaster strikes. The securities pay higher-than-benchmark interest rates to investors who risk losing their principal in the event of a disaster that meets certain conditions. Treasury two-year yields touched a record low October 1 as a report showed US manufacturing growth slowed.

The US Climate Prediction Center cut its forecast on August 5 for the hurricane period to a range of 14 to 20 named storms, down from 14 to 23. The center said on September 9 that La Nina, a weather pattern that reduces high-altitude winds, may contribute to increased Atlantic hurricane activity. It may also help suppress hurricane formation across the central and eastern tropical North Pacific through November.

Swiss Reinsurance Co., Allianz SE and American International Group Inc.'s Chartis property-casualty unit were among sellers of a total of more than $2.6 billion in cat bonds in the first three quarters of this year, an increase of about 60 percent from the same period in 2009, data compiled by Bloomberg show.

Hurricane Igor, the Atlantic season's most powerful so far, hit Bermuda September 20 and later caused heavy rain in Newfoundland.

The most active part of the season is usually from mid-August through late October, according to Dennis Feltgen, public affairs officer for the National Hurricane Center. "Anybody thinking that the season is over is kidding themselves," he said.