Record third-quarter takes 2018 cat bond issuance to $11.88bn: Report

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Our latest quarterly report on the catastrophe bond and related insurance-linked securities (ILS) market is available to download now. The report, ‘Q3 2018 – New perils help cat bond market to record Q3’, analyses a record third-quarter which saw $2.5 billion of issuance, helping the market to another record size of $36.57 billion.

Q3 2018 Catastrophe Bond & ILS Market ReportThis report reviews the catastrophe bond and insurance-linked securities (ILS) market at the end of the third-quarter of 2018, looking at new risk capital issued and the composition of transactions completed during a year which is on track to set new records for levels of catastrophe bond and related ILS market activity.

In total, nine transactions consisting of 15 tranches of notes came to market in Q3, taking issuance to a huge $2.5 billion. This is the first time in the market’s history that third-quarter issuance has surpassed $2 billion, according to data from the Artemis Deal Directory.

The record-breaking $2.5 billion of issuance is approximately $1.5 billion higher than the ten-year average for the third-quarter, coming from a mix of private, repeat and new sponsors. Privately placed (sometimes called cat bond lite) deals are now a common feature of any quarter, and contributed $27.9 million to total risk capital issued in Q3.

First time sponsors FEMA /NFIP and PG&E Corporation brought $700 million of new and diversifying risk capital to market, while $1.77 billion of issuance came from repeat sponsors.

On the back of a record $4.24 billion of issuance in Q1, combined with more than $5.15 billion of issuance in Q2, catastrophe bond and ILS issuance at the end of the third-quarter of 2018 reached an impressive $11.88 billion, taking the outstanding market size to a huge $36.57 billion, as shown by the Artemis Deal Directory.

With the market on track to set more records in 2018 and investor appetite still abundant, it remains to be seen whether insurers, reinsurers and indeed corporates will take advantage of the ability of third-party capital to absorb catastrophe linked exposure and continue to produce an increasing volume of new issuance through the rest of the year and into 2019.

Year-on-year, the outstanding catastrophe bond and ILS market has grown by $6.7 billion, or 22%, as shown by data from the Artemis Deal Directory. Just $467 million worth of deals are scheduled to mature in the final three months of the year.

This, combined with the huge level of issuance already recorded in 2018, and the fact average Q4 issuance of the last ten-years has been just shy of $2 billion, suggests the market will achieve further outright growth in 2018, again breaking all issuance records.

Stay tuned to Artemis and we’ll keep you updated as the catastrophe bond market continues to evolve and expand over the coming months.

Q3 2018 Catastrophe Bond & ILS Market ReportFor full details of the record third-quarter of 2018, including a breakdown of cat bond issuance by factors such as perils, triggers, expected loss, and pricing, as well as analysis of the issuance trends by month and year, download your free copy of Artemis’ Q3 2018 Cat Bond & ILS Market Report here.

 

For copies of all our reports, visit our archive page and download them all.

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