A quiet Q3, but cat bond market still on track for record year: Report

The catastrophe bond and related insurance-linked securities (ILS) market slowed down as is seasonally anticipated during the third-quarter of 2023, but while the $549 million of issuance was below the ten-year average for the period, the catastrophe bond market remains on track for a record year in 2023, Artemis’ latest quarterly report shows.

The Artemis Q3 2023 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.

Our new report examines the period in which catastrophe bond issuance is always slower due to the onset of the Atlantic wind season.

On the back of a record-breaking first-half to the year, there was just $549 million of new risk capital in cat bond formats brought to market during the third-quarter of 2023.

Traditional 144a property cat bond issuance once again dominated the quarter, with three deals comprised of four tranches of notes accounting for 73% of quarterly issuance.

Three privately placed cat bond transactions also featured this quarter, making up the remaining 27% of issuance in the period.

At $549 million, third quarter 2023 cat bond issuance was more than double the amount seen a year earlier but still roughly $268 million below the 10-year average for the period – all of which is examined in more detail in the Artemis Q3 2023 cat bond and related ILS market report.

Of the 144a property cat bond deals issued in the quarter, one came from repeat sponsor SageSure although for the first time via Anchor Re, its captive reinsurer, and two from sponsors returning for their second deals – Blackstone via its Gryphon Mutual real estate captive and growing Florida carrier Slide Insurance Company.

This report also dissects the pricing of cat bond notes issued in the quarter, revealing that the average multiple (price coupon divided by expected loss) remains elevated, reflecting the higher levels of reinsurance pricing still being seen in the market

144a property cat bond issuance now exceeds $10 billion in 2023, and there’s still the fourth quarter to come, with the market on track to break all records this year.

Including private cat bonds and cat bonds covering other lines of business, nine month issuance amounts to roughly $10.9 billion, which is more than $400 million above the annual total for 2022.

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 the final quarter of 2023 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 third-quarter 2023 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’ Q3 2023 Cat Bond & ILS Market Report here.

For copies of all our catastrophe bond market reports, visit our archive page and download them all.