Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

ILS and catastrophe bond risk capital outstanding nears $15 billion


Yesterday we wrote about Swiss Re’s latest insurance-linked securities and catastrophe bond market update report which see’s the reinsurer review the state of the ILS market during the first-half of 2012. Swiss Re give the ILS and cat bond sector a clean bill of health and are bullish on its opportunity to achieve further growth by the end of the year. One of the data points we wanted to share with you was the numbers on the size of the outstanding cat bond and ILS market which Swiss Re now put at $14.7 billion.

As with all reported numbers in the ILS and cat bond market reports that we refer to, the figures differ from provider to provider. Swiss Re tend to include life and health related ILS (such as mortality, life or medical benefit) but do not include any private deals. As such their numbers are much closer to those you can glean from the contents of our Deal Directory. Aon Benfield for example have put the number at $14.9 billion at the end of June.

Swiss Re now put the size of the outstanding cat bond and ILS market at $14.7 billion. This is up $1 billion from their figure at the end of 2011 of $13.7 billion, a healthy amount of growth considering that there have been $2.4 billion of transactions which have rolled off risk and matured.

Over the rest of 2012 just $1.1 billion of cat bonds and ILS are due to mature meaning that the market has every opportunity of achieving growth this year and could even come close to the all time high of 2007. $16 billion (as we’ve said before) seems eminently achievable now and with Q3 seeing some activity already in the form of Queen Street VI Re Ltd. and Vita Capital V Ltd. all eyes are looking to a good year of positive growth for the market.

You can see the amount of cat bonds outstanding in the graph below taken from Swiss Re’s report (which you can download in full here).

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Catastrophe bond risk capital outstanding

Catastrophe bond risk capital outstanding - Source: Swiss Re Capital Markets

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