Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Risk capital outstanding in the catastrophe bond market


As with any marketplace of this kind the insurance-linked securities market for catastrophe bonds size is denoted by new issuance minus maturing transactions (which leaves risk capital outstanding). As this market is not particularly old (with the first cat bond deal we’ve recorded being in 1994) it saw the amount of risk capital outstanding grow significantly over the first few years. That growth has in recent years slowed.

The reason for the outstanding amount of capital staying pretty level over the last few years is that the amount of issuance has been very close to the amount of maturing transactions. Guy Carpenter have published a very useful graph on their blog which shows the level of risk capital outstanding here (see the graph below).

Catastrophe bond risk capital outstanding 2004 - 2010

Catastrophe bond risk capital outstanding 2004 - 2010

As you can see the amount of risk capital available in the catastrophe bond market has actually declined in the last few quarters. The reason for this is that transactions issued in busy years have all been maturing close together, and this at a time when issuance is still recovering from the set back the market suffered a couple of years ago.

We’d like to see that graph begin to uptick in the next year as confidence continues to recover and issuers satisfy investors with more diversified deals. Of course the Atlantic hurricane season is going to have a lot to say about that…

Register today for ILS Asia 2023, our next insurance-linked securities (ILS) market conference. Held in Singapore, July 13th, 2023.

Artemis ILS Asia 2023 - Insurance-linked securities conference in Singapore

Get a ticket soon to ensure you can attend. Secure your place at the event here!

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