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Cat bond & related ILS market ends 2018 at new record size: Report


The catastrophe bond and related insurance-linked securities (ILS) market ended 2018 at a new record size of $37.8 billion despite the final quarter of the year seeing an average level of issuance that was dominated by mortgage ILS deals.

Q4 2018 Catastrophe Bond & ILS Market ReportOur latest quarterly report on the catastrophe bond and related insurance-linked securities (ILS) market is available to download now.

The report, ‘Q4 2018 – Mortgage insurance risk dominates, as cat risk issuance shrinks’, analyses an average fourth-quarter which saw $1.97 billion of issuance and looks at the composition of transactions issued across the full-year 2018.

Even after this average quarter 2018 has set new records for levels of catastrophe bond and related ILS market activity.

The cat bond and related ILS market experienced a record $13.9 billion of full-year issuance in 2018, including a bumper amount of mortgage insurance ILS transactions.

The fourth-quarter of 2018 saw 15 transactions issued, consisting of 23 tranches of notes, and amounting to $1.97 billion of risk capital issued, which falls just $9 million below the ten-year average for the period.

The quarter was dominated by mortgage ILS issuance though, as 68%, or roughly $1.3 billion covered mortgage insurance risks.

Meanwhile, the volume of catastrophe risk issued in the period amounted to only $707 million, or 32% of total risk capital brought to market.

However, excluding the mortgage ILS issuance from our data for full-year 2018 still results in significant market growth, year-on-year.

Without the mortgage ILS the outstanding cat bond and related ILS market ended the year at $34.8 billion in size, which represents strong growth from $30.5 billion (again without mortgage ILS) at the end of the previous year.

Reflecting the slow-down in issuance of catastrophe risk exposed ILS in the fourth-quarter, full-year 2018 issuance falls behind 2017 once the bumper crop of mortgage ILS is excluded from the data (2017: $11.9bn – 2018: $10.9bn).

Cat bond lites, or private cat bond deals, once again featured in the fourth-quarter of 2018, with $162 million of privately placed issuance during the period.

Continuing a five-year trend, catastrophe bond and related ILS issuance was dominated by the first-half of the year in 2018, in terms of the size of transactions issuance and the number of deals brought to market. Issuance in both March and May reached a staggering $2.5 billion last year, while three other months also saw issuance breach the $1 billion mark.

At least one transaction came to market in every single month of 2018, something that hasn’t happened since 2014 and which helped to drive the outstanding catastrophe bond and related ILS market to $37.8 billion at the end of 2018, its largest ever size.

Stay tuned to Artemis through 2019 and we’ll keep you updated as the catastrophe bond market continues to evolve and expand.

Q4 2018 Catastrophe Bond & ILS Market ReportFor full details of the record fourth-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’ Q4 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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