Catastrophe Bond Market Starts 2022 with an Active First Quarter

The first quarter's $3.52 billion in catastrophe bond issuance made it the third most active first quarter ever for catastrophe bonds in terms of new issuance, according to a report from Artemis.

The Q1 2022 Catastrophe Bond & ILS Market Report noted that first-quarter 2022 issuance exceeded that of last year's first quarter and was the fourth time that first-quarter issuance exceeded $3 billion since 2018.

New catastrophe bond issuance during the first 3 months of 2022 was 36 percent—$929 million—above the 10-year average for the period, Artemis reported.

The quarter also represented the third year in a row that more than 20 traditional catastrophe bonds and other insurance-linked securities (ILS) came to market during the year's first 3 months, Artemis said.

At $2.2 billion, issuance in March set a new record, the Artemis report said, and was $874 million more than the combined volume of January's and February's new issues. January's $749 million in new issuance bettered the 10-year average for the month, Artemis said, though February saw only two new deals with a combined value of $575 million, falling short of the month's 10-year average.

The Artemis report noted that in both 2020 and 2021 property catastrophe bond issuance broke full-year records after strong first quarters established the tone for the year. "It remains to be seen whether this plays out again in 2022, but strong investor and sponsor appetite has produced a robust start to the year for [catastrophe] risk deals ahead of Q2, which is historically the busiest time for the market," the report said.

New catastrophe bond and related ILS issuance during the first quarter brought total outstanding market volume to a record high of approximately $37.5 billion, according to Artemis, a nearly 5 percent increase in market size from the end of 2021.