CAT Bond, ILS Issuance Sets First-Quarter Record

The catastrophe bond and insurance-linked securities (ILS) market saw record first-quarter issuance of more than $5 billion, according to data compiled by Artemis. Exceeding the $5 billion issuance mark has been a rarity in any quarter, Artemis said.

The $5.05 billion in new issuance involved 27 deals consisting of 51 tranches of notes, Artemis said. The first-quarter issuance was up 82 percent from the same period in 2019 and was 19 percent higher than the previous first-quarter record set in 2018.

The record-breaking first-quarter issuance saw outstanding catastrophe bond and ILS market volume reaching $42.4 billion as the quarter ended, according to Artemis. While new sponsors were among the first-quarter issuers, repeat sponsors dominated the period, showing continued interest in tapping the capital markets for reinsurance and retrocession capacity, Artemis said.

Among the perils covered by the first-quarter catastrophe bond and ILS transactions were earthquakes, floods, windstorms, mortgage insurance risks, and medical benefit claims.

Artemis noted that $5.5 billion in deals are scheduled to mature in the year's second quarter, while the average level of second-quarter issuance is $3.5 billion, suggesting the market would need an above-average second quarter if the total market volume was to increase from its level at the end of the first quarter. Uncertainty around the COVID-19 pandemic could make that difficult, Artemis said, though market growth should resume once the pandemic is under better control.