Record Q1 2015 catastrophe bond & ILS issuance of $2.1 billion

by Artemis on April 1, 2015

This morning we published our latest quarterly report on the catastrophe bond and insurance-linked securities (ILS) market. The report titled ‘Q1 2015 Catastrophe Bond & ILS Market Report – The biggest first-quarter ever‘ shows that at $2.062 billion of new risk capital issued, this Q1 was a record quarter.

Q1 2015 Catastrophe Bond & ILS Market Report - The biggest first-quarter everOur latest quarterly report (PDF file) reviews the catastrophe bond and insurance or reinsurance-linked securities (ILS) market at the end of Q1 2015, looking at new risk capital issued during the first-quarter and the composition of transactions completed.

The first-quarter of 2015 saw the year start briskly, following on from the record issuance seen in 2014. In total 15 new cat bond or ILS transactions were recorded in the Artemis Deal Directory during the quarter, featuring a diverse range of risks and providing just under $2.1 billion of reinsurance and retrocession.

New records have been set in the first-quarter for both the total amount of risk capital issued, at $2.062 billion, as well as the number of transactions that came to market, at 15. Issuance was well-distributed across the quarter, with January, February and March all witnessing the second highest levels of issuance on record for those months.

Q1 can often be a busy period of the year, as renewal deals often come to market, but in 2015 the bulk of the issuance activity occurred in March, perhaps showing that sponsors are becoming happier to move away from the traditional reinsurance renewal cycle in order to find the best market conditions.

Q1 of 2015 saw a mixture of larger deals as well as six ‘cat bond lite’ or privately placed cat bond transactions. These smaller deals continue to grow in popularity as investors look to have reinsurance contracts they collateralize transformed into securities, or smaller sponsors look to tap the capital markets.

While Q1 saw a record for new catastrophe bond and ILS issuance it was not sufficient to match the significant amount of maturing transactions over the last three months, totaling $4.12 billion.

That has resulted in the outstanding catastrophe bond and ILS market shrinking over the quarter, closing Q1 at a size of $23.066 billion, down from the record of just over $25 billion set at the end of last year. However the outstanding market is approximately $3 billion larger than seen a year ago, at the end of Q1 2014.

Despite this contraction of the outstanding market in Q1 the record level of new issuance and strong forward pipeline of deals sets 2015 up to be another strong year for catastrophe bond and ILS issuance. While beating 2014’s issuance may not be asking a lot, the cat bond and ILS market should see strong outright growth once again in 2015 as the rate of maturities will be slower through the rest of this year.

Q1 2015 Catastrophe Bond & ILS Market Report - The biggest first-quarter everDownload your copy of the full report in PDF format here.

For copies of reports from previous quarters, as well as a full year review of 2014 in the Q4 report, visit our archive page to download them all.

Don’t forget that you can view the breakdown of the outstanding catastrophe bond and ILS market, as well as other statistics on the market and its growth, using our ILS Market Dashboard and range of ILS market charts, statistics and graphs.

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