An unprecedented year of new risks, records, and huge cat bond market growth: Report

The catastrophe bond and related insurance-linked securities (ILS) market saw activity levels accelerate right the way through the busiest fourth-quarter in its history, resulting in a record year of issuance and market growth, Artemis’ new quarterly market report explains.

The Artemis Q4 2023 Catastrophe Bond and related insurance-linked securities (ILS) Market Report, available to download now, examines the cat bond and related ILS risk capital issued in the quarter and also reviews the full-year.

In total, the fourth-quarter of 2023 saw $5.6 billion of issuance across full 144A property catastrophe bond transactions, cat bonds covering non-catastrophe risks, such as cyber, and privately placed deals.

It was one of the busiest quarter’s ever for the market and the busiest fourth quarter on-record, which takes total issuance for the year to more than $16.4 billion, beating the previous record from 2021 by roughly $2.5 billion.

2023 is also a record year for full 144A property cat bond issuance at $15 billion, which was supported by a healthy volume of private deals and the arrival of the first 144A cyber cat bonds ever seen.

In Q4 alone, five new sponsors entered the cat bond market, taking the number of first-time sponsors for the year to 14, which is the joint highest of any year alongside 2021.

Across the transactions issued in the quarter that we have full pricing data for, the size increased by an average of 27% while marketing. Across these same deals, the average price change of issuance was +2.7%, which suggests that pricing is stabilising somewhat after three consecutive quarters with a negative average price change.

As this new report shows, sponsors took advantage of favourable market conditions in the final quarter of the year ahead of the January renewals, and investor appetite for the cat bond product was extremely strong in 2023, with the market growing 19% to $45 billion in size.

All of our catastrophe bond market charts and visualisations are up-to-date, so include this latest quarter of issuance data.

We will keep you updated on all catastrophe bond and related ILS transaction issuance as 2024 progresses, and we’ll report on the evolving trends in the cat bond, insurance-linked securities (ILS) and collateralised reinsurance market.

For full details of fourth-quarter 2023 cat bond and related ILS issuance, including a breakdown of deal flow by factors such as perils, triggers, expected loss, and pricing, as well as analysis of the issuance trends seen by month and year.

Download your free copy of Artemis’ Q4 2023 Cat Bond & ILS Market Report here.

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