The total volume of catastrophe bonds and insurance-linked securities (ILS) issued during 2013 and listed in the Artemis Deal Directory hit $7.6417 billion by the end of the year as a flurry of deals in December closed the year at an all time high of $20.5 billion.
With the completion of the last catastrophe bond transactions of 2013, QBE’s VenTerra Re Ltd. (Series 2013-1) and Argo’s Loma Reinsurance (Bermuda) Ltd. (Series 2013-1), on the 30th of December 2013 catastrophe bond and ILS issuance jumped by another $422m taking the annual total recorded by Artemis to $7.6417 billion.
We make this the second highest annual issuance volume after 2007, but some others may call it the highest ever depending on how certain deals are accounted for. For example Swiss Re reports 2007 issuance as $8.24 billion, where as Fitch Ratings has it as $7.6 billion. So 2013 is certain to be reported as the second highest level of issuance as well as the highest, depending on whose numbers you are studying.
One area that 2013 certainly broke a record was in the actual number of catastrophe bond and ILS transactions brought to market. 2013 saw 36 individual transactions recorded in the Artemis Deal Directory, giving the year an average deal size of approximately $212.3m. This is the highest number of issuances we’ve ever recorded in a single year, with 2007 coming second at 31 transactions recorded.
As ever the majority of the transactions issued in 2013 were natural peril catastrophe bonds, making up 34 of the 36 transactions, with the other two being an extreme mortality deal and a medical benefit ratio-linked ILS transaction. U.S. wind was the focus, as is to be expected, with 24 of the 36 transactions having direct U.S. hurricane or named storm exposure and one other having exposure to U.S. wind via its provision of storm surge protection in New York (MetroCat).
In total, just over $5.1 billion of the $7.6417 billion of risk capital issued in catastrophe bond and ILS deals in 2013 has some level of exposure to U.S. wind. That’s just under 68% of total 2013 issuance, which is a typical amount of exposure to U.S. wind and shows that while the market saw diversification opportunities in 2013, the focus continued to be on U.S. wind.
The chart below shows annual catastrophe bond and ILS issuance volume as well as the number of transactions issued each year. The growth since 2008 is particularly impressive.
Catastrophe bond & ILS issuance volume and number of transactions by year
2013 saw catastrophe bond issuance spread across the entire year, with only two months seeing no transactions complete (February and November). April and May were the peak months in terms of issuance volume with December coming a close third thanks to the final flurry of transactions offered as we approached the end of year renewals.
This chart shows catastrophe bond and ILS issuance volume by month as well as the number of transactions issued.
2013 catastrophe bond & ILS issuance and number of transactions by month
2013 was only the second year ever which saw over $1 billion of issuance in each quarter, with only 2007 having seen this level of consistency in quarterly issuance before. Q2 saw the highest level of issuance, with $2.5535 billion of risk capital issued, followed by Q4 at $1.877 billion, Q3 at $1.68 billion and Q1 at $1.5312 billion.
The high level of issuance seen during Q3 was particularly unusual in 2013, as that quarter is right in the middle of the U.S. hurricane season and tends to see a slowdown in catastrophe bond issuance. Not last year though, with a number of cat bonds with exposure to U.S. wind being issued successfully showing a new level of acceptance of risk and appetite for new deals among ILS investors.
Catastrophe bond & ILS issuance by quarter
The catastrophe bond and ILS market finished off 2013 on a high, with the size of the outstanding cat bond and ILS market closing out the year at just over $20.5 billion. Three maturing transactions rolled off risk at the end of the December, taking $356m out of the market, but thanks to the strong December flow of new ILS deals the market grew again to finish the year at an all time high.
Catastrophe bond & ILS volume issued and outstanding by year - Source: Artemis & Swiss Re
Looking ahead, 2014 sees attractive issuance conditions continue with investor appetite for new catastrophe bond and ILS risk capital remaining high. The market is still well-capitalised and there is still excess appetite from investors hoping to come into the market, but for the moment issuance is still not sufficient to absorb all of this demand. Some ILS investment managers remain closed to new inflows of capital, something that may change as we move through 2014 if deal-flow is sufficiently strong enough.
Every catastrophe bond and ILS deal issued in 2013 and included in our Deal Directory is listed below. In total Artemis recorded $7.6417 billion of ILS issuance from 36 transactions, giving an average deal size of approximately $212.3m. That’s well up on last years totals of $6.339 billion from 29 deals and an average deal size of approximately $219m.
We look forward to keeping you abreast of any, and all, developments in the cat bond and ILS market as we move through 2014. Remember, for full details of every catastrophe bond & ILS transaction since the market began just visit our Deal Directory.
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| Issuer | Cedent | Risks / Perils covered | Size | Date | |
|---|---|---|---|---|---|
 |
Windmill I Re Ltd. (Series 2013-1) | Achmea Reinsurance Company N.V. | Dutch windstorm | €40m | Dec 2013 |
|
Queen City Re Ltd. (Series 2013-1) | American Modern Insurance Group, Inc. | U.S. named storms | $75m | Dec 2013 |
|
VenTerra Re Ltd. (Series 2013-1) | QBE Insurance Group Ltd. subsidiaries | U.S. earthquake, Australia cyclone, Australia earthquake | $250m | Dec 2013 |
|
Loma Reinsurance (Bermuda) Ltd. (Series 2013-1) | Argo Group | Tropical cyclones, U.S earthquake, U.S. severe thunderstorm | $172m | Dec 2013 |
|
Tradewynd Re Ltd. (Series 2013-2) | AIG | U.S., Caribbean, Gulf of Mexico named storms. U.S., Canada earthquake | $400m | Dec 2013 |
|
Residential Reinsurance 2013 Ltd. (Series 2013-2) | USAA | U.S. tropical storms, U.S. earthquakes, severe thunderstorms, winter storms and wildfires in California | $150m | Dec 2013 |
|
Galileo Re Ltd. (Series 2013-1) | Catlin | U.S. named storms, U.S. earthquake, Canada earthquake, European windstorm | $300m | Oct 2013 |
|
Calypso Capital II Ltd. (Series 2013-1) | AXA Global P&C | European windstorm | €350m | Oct 2013 |
|
Atlas IX Capital Limited (Series 2013-1) | SCOR Global Life SE | Extreme mortality | $180m | Sep 2013 |
|
Nakama Re Ltd. (Series 2013-1) | Zenkyoren | Japan earthquake | $300m | Sep 2013 |
|
Northshore Re Limited (Series 2013-1) | AXIS Capital Holdings Ltd. subsidiaries | U.S. hurricane, U.S. earthquake | $200m | Aug 2013 |
|
MetroCat Re Ltd. (Series 2013-1) | First Mutual Transportation Assurance Co. | Storm surge (named storm induced) | $200m | Jul 2013 |
|
Sullivan Re Ltd. (Series 2013-1) | New Jersey Manufacturers Insurance Group | U.S. named storms | $60m | Jul 2013 |
|
Mona Lisa Re Ltd. (Series 2013-2) | Renaissance Re and DaVinci Re | U.S. and Puerto Rico named storms. U.S. earthquakes | $150m | Jul 2013 |
|
Mythen Re Ltd. (Series 2013-1) | Swiss Re | U.S. hurricane | $100m | Jul 2013 |
|
Tradewynd Re Ltd. (Series 2013-1) | AIG | U.S., Caribbean, Gulf of Mexico named storms. U.S., D.C., Canada earthquake | $125m | Jul 2013 |
|
Green Fields II Capital Ltd. (Series 2013-1) | Groupama | European windstorm (France only) | €280m | Jul 2013 |
|
Ibis Re II Ltd. (Series 2013-1) | Assurant | U.S. hurricane | $185m | Jun 2013 |
|
Queen Street VIII Re Ltd. | Munich Re | U.S. hurricane, Australia cyclone | $75m | Jun 2013 |
|
Tramline Re II Ltd. (Series 2013-1) | Amlin AG | U.S earthquake, Canada earthquake | $75m | Jun 2013 |
|
Oak Leaf Re Ltd. (Series 2013-1) | Unknown Florida based cedant | Florida hurricanes | $30.49m | Jun 2013 |
|
Residential Reinsurance 2013 Ltd. (Series 2013-1) | USAA | U.S. hurricane, U.S. earthquake, U.S. severe thunderstorm, U.S. winter storm and California wildfire | $300m | May 2013 |
|
Blue Danube II Ltd. (Series 2013-1) | Allianz Argos 14 GmbH | U.S., Caribbean, Central American, Mexican hurricane. U.S., Canadian earthquake | $175m | May 2013 |
|
Sunshine Re Ltd. (Series 2013-1) | Florida Municipal Insurance Trust | Florida hurricanes | $20m | May 2013 |
|
Long Point Re III Ltd. (Series 2013-1) | Travelers | U.S. hurricane (Northeastern U.S. states only) | $300m | May 2013 |
|
Armor Re Ltd. (Series 2013-1) | American Coastal Insurance Company | Florida hurricanes | $183m | May 2013 |
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Pelican Re Ltd. (Series 2013-1) | Louisiana Citizens | Louisiana hurricane | $140m | May 2013 |
|
Sanders Re Ltd. (Series 2013-1) | Allstate | U.S. hurricane, U.S. earthquake | $350m | May 2013 |
|
Bosphorus 1 Re Ltd. | Turkish Catastrophe Insurance Pool | Turkey earthquake | $400m | Apr 2013 |
|
Tar Heel Re Ltd. (Series 2013-1) | North Carolina JUA / IUA | North Carolina hurricane | $500m | Apr 2013 |
|
Caelus Re 2013 Ltd. (Series 2013-2) | Nationwide Mutual Insurance Co. | U.S. hurricane, U.S. earthquake | $320m | Apr 2013 |
|
Merna Re IV Ltd. (Series 2013-1) | State Farm | U.S. earthquake (New Madrid region) | $300m | Apr 2013 |
|
Everglades Re Ltd. (Series 2013-1) | Citizens Property Insurance | Florida hurricanes | $250m | Mar 2013 |
|
Caelus Re 2013 Ltd. (Series 2013-1) | Nationwide Mutual Insurance Co. | U.S. hurricane, U.S. earthquake | $270m | Mar 2013 |
|
Vitality Re IV Ltd. (Series 2013-1) | Aetna Life Insurance Company | Medical benefit claims levels | $150m | Jan 2013 |
|
Skyline Re Ltd. (Series 2013-1) | The Cincinnati Insurance Company | New Madrid earthquake and severe thunderstorms | $61.2m | Jan 2013 |
