Cat bond issuance accelerates in Q2, market hits record size of $48bn: Report
Catastrophe bond and related insurance-linked securities (ILS) market activity levels accelerated in the second-quarter of 2024, with a record $8.4 billion of new risk capital issued driving the market to a record size of $48 billion, Artemis’ just-released new quarterly market report details.
The Artemis Q2 2024 Catastrophe Bond and related insurance-linked securities (ILS) Market Report, available to download now, examines the cat bond and related ILS risk capital issued in the quarter and also reviews the first-half.
The second-quarter of 2024 saw a record $8.4 billion of new issuance across full 144A property catastrophe bond transactions, cat bonds covering non-catastrophe risks, such as cyber risks in this case, and privately placed cat bond deals.
34 new cat bond transactions were issued during the second-quarter, comprised of 52 tranches of notes, as positive momentum was not only sustained but accelerated in the period, taking first-half 2024 issuance to an impressive $12.6 billion, which is another record for the sector.
The quarter also set another record quarter for the traditional 144a property catastrophe bond space, which accounts for 98% of Q2 2024 issuance at $8.2 billion, and 96% of H1 2024 issuance at $12.1 billion, according to data from the Artemis Deal Directory.
Numerous repeat and a healthy number of new sponsors contributed to issuance in the second quarter. The period also featured the second largest cat bond ever, a $1.4 billion Texas multi-peril deal, and two other transactions sized at $1 billion or more. Some new risks also featured this quarter, including a small yet novel parametric cloud outage cyber cat bond.
As readers of Artemis will be aware, spreads in the cat bond space have fluctuated since the highs of 2023 but remain elevated and are clearly still very attractive to investors. But sponsors also had success this quarter, achieving strong execution on many deals while the majority of issuances also grew in size while marketing, which our new report goes into some detail on.
Given just how strong the opening two quarters of 2024 have been, it’s no surprise that the outstanding cat bond market has also reached a new end-of-quarter high of $48 billion.
Over the rest of the year, Artemis’ data shows approximately $3.35 billion of cat bond notes scheduled to mature by year-end, meaning if issuance is just around the 10-year average we should see the market sustain its new record size. More on this in our new report.
But, of course, with issuance continuing to break records, the expectation is the rest of this year could beat long-term averages, meaning further outright growth of the catastrophe bond market is certainly possible.
Hurricane season adds some uncertainty over market activity levels for the coming months and end of year, naturally, but the catastrophe bond market remains poised for its first $20 billion year of issuance and a $50 billion record outstanding market size is also in reach, if the cat bond market can maintain the pace seen over the last couple of years.
All of our catastrophe bond market charts and visualisations are up-to-date, so include this latest quarter of issuance data.
We will keep you updated on all catastrophe bond and related ILS transaction issuance as 2024 progresses, and we’ll report on the evolving trends in the cat bond, insurance-linked securities (ILS) and collateralised reinsurance market.
For full details of second-quarter 2024 cat bond and related ILS issuance, including a breakdown of deal flow by factors such as perils, triggers, expected loss, and pricing, as well as analysis of the issuance trends seen by month and year.
Download your free copy of Artemis’ Q2 2024 Cat Bond & ILS Market Report here.
For copies of all our catastrophe bond market reports, visit our archive page and download them all.
