Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

$2.118 billion catastrophe bond issuance in Q2, year to date hits $3.61 billion


We’re now into July and so can report on the volume of catastrophe bonds that were issued during the second quarter of 2012. After a record Q1 the second quarter, while not hitting record levels, has reached a very healthy $2.118 billion of new catastrophe bond issuance according to transactions recorded in our Deal Directory. For the year of 2012 to date that takes total issuance to just slightly over $3.61 billion which is inline with the majority of predictions that suggest 2012 should see between $5 billion and $7 billion of deal-flow.

The second quarter was helped to this healthy level of issuance by cat bonds like the record-breaking $750m Everglades Re Ltd. and the $400m Mythen Ltd. deal. Without those Q2 would actually have been below average for issuance volume. We recorded eight transactions during the quarter, an average amount, bringing precisely $2.117.78 of new risk capital to the catastrophe bond market.

Our numbers will differ slightly from some of the other Q2 issuance totals that we will report over the next few weeks as other sources of cat bond data report on the market in Q2. The Artemis Deal Directory includes every insurance-linked security transaction which fits into our thinking around what constitutes reinsurance risk transfer to capital market investors. Hence we include all the 144a catastrophe bond deals, private cat bond deals like the recent Oak Leaf Re Ltd. (Series 2012-1) as well as any life, mortality, health, longevity or diversifying risk-linked ILS transactions. Q2 of 2012 has only seen catastrophe bonds come to market and that is typical of the time of year which typically see’s a lot of hurricane risk and other natural perils. Other sources will likely report $2.095 billion as the q2 issuance total as they will mostly include just the seven public 144a cat bond transactions but not the Oak Leaf Re 2012 deal.

Here’s a useful list of all the cat bond and ILS deals issued during the second quarter. Of course you can also see details of every other deal this year and since the market began in our comprehensive Deal Directory.

Q2 2012 Catastrophe Bond Transactions

Issuer Sponsor Risks / Perils covered Size Date
Oak Leaf Re Ltd. (Series 2012-1) Unknown Florida based cedant U.S. hurricane $22.78m Jun 2012
Long Point Re III Ltd. (Series 2012-1) Travelers U.S. hurricane (Northeastern U.S. states only) $250m Jun 2012
Residential Reinsurance 2012 Ltd. (Series 2012-1) USAA U.S. hurricane, U.S. earthquake, U.S. severe thunderstorm, U.S. winter storm, U.S. wildfire $200m May 2012
Mythen Ltd. (Series 2012-1) Swiss Re First and second event U.S. hurricane, European windstorm $400m May 2012
Everglades Re Ltd. (Series 2012-1) Citizens Property Insurance Florida hurricanes $750m Apr 2012
Pelican Re Ltd. (Series 2012-1) Louisiana Citizens Louisiana hurricane $125m Apr 2012
Akibare II Ltd. Mitsui Sumitomo Insurance Co. Ltd. Japan typhoon (wind & flood losses) $130m Apr 2012
Blue Danube Ltd. (Series 2012-1) Allianz Argos 14 GmbH U.S. hurricane, U.S. earthquake, Canada earthquake, Caribbean hurricane, Mexico hurricane $240m Apr 2012

Q3 has also seen some issuance action with the as yet unsized Queen Street VI Re Ltd. currently being marketed. The third quarter is normally the slowest of the year so it will be interesting to see what else comes to market in the next three months.

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