Catastrophe bond issuance still on record pace after Q3: Report

Catastrophe bond and related insurance-linked securities (ILS) issuance continued at record pace through the third-quarter of 2021, with over $2.7 billion of new risk capital issued and the market now well on-track to beat all its records in 2021, according to the latest report and data from Artemis.

Our latest quarterly report on the catastrophe bond and related insurance-linked securities (ILS) market is available for you to download now.

The report, ‘Q3 2021 – Record pace of issuance continues’, analyses a record third-quarter featuring over $2.7 billion of new catastrophe bond and related ILS issuance and explores the composition of transactions issued during the three-month period.

Our new report includes all catastrophe bond and related insurance-linked securities (ILS) issuance that we’ve covered here on Artemis, so features mortgage ILS market deal-flow as well.

But it also explores and breaks down issuance by risks and perils, so allowing for analysis and comparison of natural catastrophe risk deals, or those linked to other lines of insurance and reinsurance business. Download your copy here.

During the third-quarter of 2021, 12 transactions were issued, featuring 25 tranches of notes, that together resulted in more than $2.7 billion of new risk capital issued, a record for any Q3.

In terms of pure Rule 144a property catastrophe bonds issued in Q3 2021, they amounted to $1.15 billion, which was the third busiest third-quarter on record.

Adding in other insured perils and private cat bonds, or cat bond lites, but still excluding the mortgage ILS deals, Q3 issuance was $1.35 billion, which is again the third highest level recorded for the quarter.

Which means that, Q3 alone only broke records when including the mortgage deals, so all of the catastrophe bond and related ILS that we track in our extensive Deal Directory.

But year-to-date figures are where the record-breaking issuance pace has continued, with nine-month totals breaking all records so far in 2021.

Pure 144a property catastrophe bond issuance for the first nine-months of 2021 now stands at almost $9.7 billion, beating the previous records set in 2017 and 2018 when issuance came close to $9.1 billion for the first three-quarters of the year each time.

Including cat bonds covering other lines of business (life, health specialty lines) and any private cat bonds we’ve covered, nine-month issuance in 2021 rises to $10.82 billion, also a new record by beating 2017’s $10.4 billion figure for this grouping of deals.

Including the mortgage ILS deals we cover that were issued and the nine-month issuance tally for 2021, to the end of September, reaches a stunning $15.8 billion, which even with three months still to run is now just $612 million behind the full-year record set in 2020.

All of which shows that the record pace has persisted through the year-to-date in 2021, as a result of which we believe the market will break almost all its records in 2021, as we’re told the pipeline for new issues remains strong for the last quarter of the year.

The outstanding catastrophe bond and related ILS market has also reached new heights at the end of the third-quarter of 2021.

Outstanding Rule 144a pure property catastrophe bonds issued stand at almost $32.3 billion, as of the end of September 201.

Add in the life, health, specialty and other line-of-business catastrophe bonds that are currently outstanding as well and the total size of the market reached an impressive new high at just under $35.5 billion as of September 30th 2021, which is up from the middle of the year as the market continues to expand.

Factor in mortgage ILS, but without amortising them, and our total outstanding figure, for catastrophe bonds and all related ILS that we track here at Artemis is also at a new high, of $52.8 billion.

All of our cat bond market charts and visualisations are up-to-date and include the latest quarter of issuance.

So, 2021 is almost certainly going to break the records for issuance of pure property catastrophe bonds, catastrophe bonds including other lines (life, health, specialty etc) and mortgage ILS issuance is also on-track to near or best its record as well.

Our sources suggest the issuance pipeline looks strong for the final quarter of the year and also for the first-quarter of 2022.

Appetite to access the capital markets for reinsurance persists and has been growing, while the need for retrocession capacity remains strong and index-trigger cat bonds are growing in popularity as well, it seems.

At the same time, corporate cat bond issuers continue to enter the market and the flow of life, health and specialty ILS in cat bond form is expected to continue.

We’ll keep you updated on all catastrophe bond and related ILS transaction issuance, as well as evolving trends in the cat bond and insurance-linked securities (ILS) market.

For full details of third-quarter 2021 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’ Q3 2021 Cat Bond & ILS Market Report here.

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