Outstanding catastrophe bond market hits $26 billion again

by Artemis on December 2, 2016

The outstanding catastrophe bond market has reached and passed $26 billion in size again, the first time since early April 2016, as the completion of the CEA’s $500m Ursa Re Ltd. (Series 2016-1) cat bond and American Strategic Insurance Group’s $200m Bonanza Re Ltd. (Series 2016-1).

2016 catastrophe bond issued and outstandingThe completion of these two catastrophe bond transactions, which have both been listed on the Bermuda Stock Exchange (BSX), takes 2016 issuance passed the $6 billion mark for the first time in 2016.

The outstanding catastrophe bond market now stands at $26.394 billion, according to data from the Artemis Deal Directory, but this could slip back just under the $26 billion mark by year-end as maturities reduce the size of the outstanding market slightly.

There is $600m of cat bond notes which will mature before the end of this year, but only one transaction still being marketed, the currently €180m Horse Capital I DAC third-party motor liability ILS transaction from Generali.

If that transaction remains the same size then Artemis forecasts the outstanding market would close out 2016 at $25.985 billion in size. So it would not take much growth for the market to increase to above $26 billion again at year-end.

Whatever happens with the innovative Horse Capital I transaction the outstanding market is set to achieve outright growth for the year, having ended 2015 at $25.903 billion in size.

In a year when competition from traditional reinsurance capital has seen a number of transactions fail to get renewed in the ILS market that is testament to the continued expansion of the market to include new sponsors, perils and terms, enabling it to continue achieving outright growth.

So while 2016 will not see any records set for the catastrophe bond market, in terms of issuance or the market’s size, it will be another year that sees outright growth of risk capital outstanding, which is a healthy signal for the future.

View all of Artemis’ catastrophe bond market charts and statistics here.

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