Catastrophe bond & related ILS set for record $10bn+ H1 in 2021

Issuance of new catastrophe bonds and other related insurance-linked securities (ILS) we track here at Artemis is now set to break new ground for the first-half of 2021, with more than $10 billion of issuance now anticipated, according to our latest data on the market.

The total issuance we’ve tracked so far this year that has already completed and settled, across property catastrophe bonds, other line-of-business cat bonds, private cat bonds and also mortgage insurance-linked securities (ILS), has already reached more than $9 billion.

Almost $5.6 billion of the total issued so far and tracked by us at Artemis represents pure Rule 144A property catastrophe bonds.

Another $350 million are cat bonds focused on non-catastrophe risks (so specialty insurance or reinsurance lines and life or health related 144A deals), while $521.4 million is from private catastrophe bonds (or cat bond lites) and the remaining $2.64 billion from the mortgage ILS market.

Analyse cat bond and ILS issuance data using our interactive charts.

Issuance has accelerated during the second-quarter of the year and while currently, on Artemis’ data, Q2 2021 won’t beat the record, once added to the busy first-quarter of this year the first-half is now on-track to surpass $10 billion for the first-time ever.

Based on including all of the latest catastrophe bond transactions that we have the data on and taking into account their upsizing, which has been so common through recent months, we now project total catastrophe bond and related ILS issuance of approximately $10.35 billion for H1 2021, which could of course move higher if any deals upsize further, or more come to market in June.

That first-half 2021 projection would break down as $6.84 billion of 144A property catastrophe bonds, as well as the $350 million of other cat bonds, $521 million of private cat bonds, and $2.64 billion of mortgage ILS deals.

The previous highest first-half issuance was in 2017, when it amounted to almost $9.8 billion.

However, pure 144A property catastrophe bond issuance was higher that year than in 2021, at just over $8.5 billion and still holds the record, while private cat bonds were also higher at $823 million, but other lines cat bonds and mortgage ILS were far lower than this year.

So we aren’t projecting a first-half record for 144A catastrophe bonds this year yet, although there is still a chance if June turned out to be another active month for the cat bond market.

Still, the first ever $10 billion of cat bonds and related ILS record for the first-half of the year is an important milestone.

As 144A catastrophe bonds, covering property cat reinsurance risks and other lines such as specialty/life/health are projected by us to reach almost $7.2 billion before the end of this month (not even counting June), 2021 has still seen a very healthy and busy half-year for the ILS market and investment community.

Helping to drive issuance of catastrophe bonds higher through the last few months has been the attractive market conditions and strong execution witnessed, with the majority of sponsors achieving both an upsizing of their cat bond backed reinsurance protection in 2021, as well as securing it at lower than initially projected pricing.

As we’ve been explaining, cat bond multiples at market are now back at levels last seen in 2019, while the market spread above expected loss has come down significantly compared to last year, but remains above 2019 and 2018 on a weighted basis.

Stay tuned to Artemis for news of every catastrophe bond and related ILS transaction that comes to market, as well as other structures including reinsurance sidecars.

You can view information on every catastrophe bond issued so far in 2020 and all prior years, totalling over 700 issues, in the Artemis Deal Directory.

Keep up-to-date with the make-up of the catastrophe bond and ILS market using the Artemis Catastrophe Bond & ILS Market Dashboard, designed to be a simple and effective tool providing key data and statistics on every transaction (there are 700+) contained in our catastrophe bond & ILS Deal Directory.

Analyse the current breakdown of the market in our range of charts, allowing you to view key statistics on the cat bond market.