66: Catastrophe bonds on-track to break records after busy Q2

The catastrophe bond market is on-track to break multiple records after a particularly busy second-quarter of 2021. Activity in the catastrophe bond and related insurance-linked securities (ILS) market accelerated again in the second-quarter of 2021, with the three-months seeing an incredible $8.5 billion of new risk capital come to market, according to the latest report and data from Artemis. Q2 2021 has set a new quarterly record for issuance, at $8.5 billion. This staggering level of new reinsurance and retrocession risk capital was supplied through 30 transactions consisting of 66 tranches of notes. Of the record breaking Q2 issuance total, a significant almost $6 billion, or more than 70%, covered property catastrophe risks. Our data shows that this is behind only Q2 2017, a period in which a huge $6.4 billion of quarterly issuance covered catastrophe risks. However, as at the end of H1 2021, cat risk issuance has reached a new high of more than $8.5 billion for the first six months of this year, which is slightly higher than the record for property cat bonds issued in the first-half previously set in H1 2017. Year-on-year, cat bond and ILS issuance increased by approximately $4.87 billion, ensuring that for the first time ever, H1 issuance has surpassed the $10 billion mark. In fact, combined with robust investor demand for reinsurance-linked returns and sponsor appetite for protection in Q1, the $8.5 billion of issuance witnessed in Q2 now takes H1 2021 total issuance of catastrophe bonds and related insurance-linked securities (ILS) to a massive $13.12 billion. To put this into context, more than $13 billion of issuance at the halfway stage of the year means that 2021 is already the third most active full-year on record, behind only the $16.4 billion and $13.9 billion recorded in 2020 and 2018, respectively. As demand for collateralized reinsurance persists and the cat bond market offers particularly attractive pricing conditions, we expect issuance to remain solid through the full-year.

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