2015 catastrophe bond & ILS issuance passes $6bn from 40 deals

Catastrophe bond and insurance-linked securities (ILS) issuance recorded in the Artemis Deal Directory has passed the $6 billion mark already in 2015, as the rapid rate of issuance and growing number of private deals helps the market maintain a near record pace.

It’s taken a little longer for the catastrophe bond and ILS market transactions listed in our Directory to pass the $6 billion mark in 2015. Last year, the market reached $6 billion of issuance in June, helped by the very large $1.5 billion Everglades Re cat bond.

The latest cat bond deal has completed today. The Turkish Catastrophe Insurance Pool’s (TCIP) parametric earthquake reinsurance bond Bosphorus Ltd. (Series 2015-1) adds another $100m of risk capital, taking the market to this new milestone.

In 2015 though, the pace of issuance has beaten the prior year, with the now $6.066 billion of new issuance coming from an impressive 40 completed transactions.

In 2014, by this time in August, the market had seen  a little more risk capital issued at $6.322 billion but from just 33 transactions.

So 2015, despite all the talk of how difficult it would be for the ILS and cat bond market to repeat the record level of issuance seen in 2014, is maintaining its pace. In fact if you discounted the Everglades 2014 deal, or gave it a more typical average size, this year would have seen both more issuance and more deals.

2015 catastrophe bond & ILS issuance to Aug 17th 2015 (click for interactive version)

The level of issuance has been helped by an increased number of private ILS deals and cat bond lites coming to market in 2015, as smaller sponsors seek securitized reinsurance protection, helping to ensure a steady pipeline of risk has been available to ILS investors and fund managers throughout the year so far.

With almost four and a half months left of 2015 there is a chance that we could see another record year of catastrophe bond and ILS issuance, at least based on Artemis’ data.

If the market can once again near the $9 billion mark it will help investors to deploy some of the sidelined capital and ensure that cat bonds and ILS once again grow their share of global reinsurance capacity at risk.

One of the best figures for monitoring the rate of catastrophe bond and ILS activity is the 12 month trailing issuance figure. For the last 12 months, September 2014 to August 2015, the Artemis Deal Directory has recorded almost $8.8 billion of risk capital issued through 51 transactions, tantalisingly close to the magic $9 billion figure.

The outstanding market remains a little smaller than at the end of 2014, sitting currently at $24.979 billion according to Artemis’ numbers. But if issuance continues even at an average pace we should see the cat bond market grow in outstanding size again by year-end.

So it looks like the impressive start to 2015 has continued, with cat bond and ILS issuance actually outpacing the record year of 2014 if you were to reduce the Everglades deal down to a more typical average transaction size.

With the rate of issuance up and plenty of time in the year to come, whether 2015 beats the previous years record will likely have a lot to do with the cost of traditional and alternative reinsurance capital in advance of the January 2016 reinsurance renewals.

If ILS and cat bond capacity remains competitive then there is every reason to believe that we could see another $9 billion year in 2015.

You can view information on every catastrophe bond issued so far in 2015 in the Artemis Deal Directory.

Keep up-to-date with the make-up of the catastrophe bond and ILS market using the Artemis Catastrophe Bond & ILS Market Dashboard, designed to be a simple and effective tool providing key data and statistics on every transaction (there are 380+) contained in our catastrophe bond & ILS Deal Directory.

View the current breakdown of the market in our range of charts, allowing you to analyse key stats on the cat bond market.