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Catastrophe bond, ILS issuance rises 82% YOY in Q1 – Artemis

The first quarter of 2020 saw a record-breaking $5.05 billion issuance of catastrophe bond and related insurance-linked securities, an increase of 82% from the prior-year period, according to a market report from Artemis.

The first-quarter issuance is $2.6 billion higher than the 10-year average for the quarter, according to the report. The record-breaking level of issuance places the outstanding catastrophe bond and ILS market size at $42.4 billion by the end of the first quarter.

The market saw 27 deals consisting of 51 tranches of notes in the first quarter, making the period the most active first quarter ever in terms of the numbers of deals issued, Artemis reported. The average transaction size for the period was $187 million, which was slightly above the 10-year average for the period of $184 million.

There were approximately $3.9 billion of catastrophe risk-focused deals in the period, with U.S. multi-peril deals from Markel Bermuda Ltd., American Strategic Insurance Corp., Nationwide Mutual Insurance Co. and Allstate Corp. totaling about $1.04 billion of the issuance.

The volume of the catastrophe risk-focused deals, which represents 77% of the total issuance in the first quarter, topped the previous record in the first quarter of 2018 by over $250 million.

Repeat sponsors dominated the period in terms of the issued number of transactions and risk capital volume, according to the report. New sponsors like Markel Bermuda and Bayview Asset Management LLC entered the marketplace in the first quarter, with a $100 million U.S. multiperil risks deal and a $225 million U.S. quake deal, respectively.

The quarter also featured some private deals from unknown sponsors, which offered protection against U.S. and unknown property catastrophe risks, and Turkey and Japan quake exposure, according to the report.