Swiss Re Insurance-Linked Fund Management

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2011 cat bond & ILS monthly issuance vs historical average


Catastrophe bond and insurance-linked security issuance patterns went out the window last year as the issues the market faced impacted primary market deal flow and resulted in some months drastically underperforming while others significantly outperformed in terms of new cat bonds or ILS issued. Reinsurer Swiss Re published a graph in their recent ILS market update, which we covered in more detail here, which clearly shows the month-to-month issuance volumes during 2011 and it makes obvious where the market slowed down or attempted to catch up.

The chart below shows that the first month of 2011, January, saw no transactions at all but February and March were well above the historical average. But then that all changed, first the Tohoku earthquake knocked the market back but it should have recovered quickly, however the RMS model change then caused significant uncertainty in the market for issuers which lasted right through the peak Q2 issuance period. The market rebounded in August and then ticked along nicely through Q3 and into Q4 until 2011 finished particularly strongly in December with a bumper month of issuance.

Monthly ILS & cat bond issuance: 2011 vs historical average

Monthly ILS & cat bond issuance: 2011 vs historical average - Source: Swiss Re Capital Markets (as of 31 Dec 2011)

It will be interesting to see whether 2012 follows the more typical pattern of the average trend line in the graph above. So far January would be well above the average of just over $200m as there is already well over $500m of new deals being marketed.

Details on every cat bond and ILS transaction from 2011 and also every deal which is in the market already in 2012 can be found in our Deal Directory.

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