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Catastrophe bond & related ILS issuance hit $4.63bn in Q1 2021: Report


Issuance of new catastrophe bonds and related insurance-linked securities (ILS) continued apace in the first-quarter of 2021, with the period seeing $4.63 billion of new risk capital come to market, according to the latest report and data from Artemis.

Q1 2021 catastrophe bond ILS market reportOur latest quarterly report on the catastrophe bond and related insurance-linked securities (ILS) market is available for you to download now.

The report, ‘Q1 2021 – Upsizing and price declines underpin busy start to the year’, analyses a busy first-quarter start to 2021 that saw an impressive $4.63 billion of new cat bond and related ILS issuance and analyses the composition of transactions issued during the three-month period.

Our new report also details that one of the hallmarks of Q1 2021 issuance has been the pricing of newly issued 144A catastrophe bond transactions.

Artemis’s data on the market, available through our extensive Deal Directory, shows that during the first-quarter of 2021, all but one tranche of successfully issued 144A property catastrophe bond notes saw its pricing decline to below the mid-point of initial guidance.

Catastrophe bond and related ILS issuance amounted to $4.63 billion as at the end of Q1, making it the third time in the past four years that Q1 issuance has surpassed the $4bn mark.

Although down on the record-breaking $5bn issued in the opening quarter of last year, issuance of cat bonds and related ILS in Q1 2021 still came in almost $2bn above the ten-year average for the period.

The impressive volume of new risk capital issued in the period came from 27 transactions comprised of 44 tranches of notes.

Of this, a significant 22 transactions with a combined value of roughly $2.8bn covered property catastrophe risks, which accounts for over 60% of issuance.

Mortgage ILS issuance, so insurers using a cat bond structure to secure mortgage reinsurance protection, was also strong in the quarter.

Meanwhile, the volume of private cat bond deals and non-catastrophe ILS also increased year-on-year, with all of this detailed in our new report.

In 2021, the majority of first-quarter issuance came from repeat sponsors, including a mix of regular market participants for who cat bonds and ILS are a regular source of reinsurance or retrocessional protection, as well as others returning for just their second or third time in the market’s history.

First time sponsors also featured this year, which is positive for the market showing a continued expansion in the range of ceding companies looking to catastrophe bonds and ILS to source reinsurance risk capital.

In Q1 2021, first time sponsors included Florida-based insurer Universal (UPCIC) and also a groundbreaking cat bond for humanitarian financing response needs from the Danish Red Cross.

Our new report contains a detailed breakdown of issuance from the first-quarter, including details on catastrophe bond perils, triggers, risk levels and pricing factors.

While catastrophe risk focused deals dominated once again, making up 60% of issuance in Q1 2021, mortgage ILS continues to feature and we continue to cover these transactions as well, as they become an increasing source of capital markets backed reinsurance protection.

Q1 was another strong start to the year for the catastrophe bond and ILS market, and as of the end of March our figure for the outstanding market size rose to a new high of $48.13 billion.

Over $4.8 billion of cat bond deals are scheduled to mature in the second-quarter of 2021, which means it’s going to take another above-average quarter of new issuance to ensure outright growth once again.

Stay tuned to Artemis as we move through the second-quarter of 2021, which is forecast to be a busy period for new catastrophe bond issuance and we’ll detail every transaction in our Deal Directory.

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.

Q1 2021 catastrophe bond and ILS market reportFor full details of first-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’ Q1 2021 Cat Bond & ILS Market Report here.


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

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

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