Record setting cat bond market trend continues with strongest ever Q1: Report

The catastrophe bond and related insurance-linked securities (ILS) market has continued to set new records in the first-quarter of 2024, with an impressive $4.23 billion of new issuance recorded, Artemis’ new quarterly market report explains.

The Artemis Q1 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 full-year.

The first-quarter of 2024 saw a record $4.23 billion of new issuance across full 144A property catastrophe bond transactions, cat bonds covering non-catastrophe risks, such as health risks in this case, and privately placed cat bond deals.

The opening quarter of the year picked up where 2023 left off, driven by strong interest in cat bonds as a source of reinsurance from repeat and four new sponsors which combined sponsored 24 transactions comprised of 34 tranches of notes.

Q1 2024 is just the second time in the market’s history that first quarter issuance has exceeded $4 billion, and at $4.23 billion, issuance was 30% higher than Q1 2023 and is above the 10-year average for the period by roughly $1.1 billion.

It’s been an especially busy quarter for the 144A property catastrophe bond market, which accounted for 92% of Q1 2024 issuance.

In addition, there was a $200 million health insurance linked deal from Aetna and $159 million of private cat bonds issued during the quarter.

Readers will be aware that in 2023 investors were treated to record high spreads in the cat bond market.

Evidenced by tightening early in 2024, the average spread of Q1 2024 issuance is slightly lower than in Q4 2023, and the same is also true for the excess spread above expected loss.

Despite this, both metrics remain healthy compared to prior years and it’s clearly still a very attractive asset class to investors.

Despite the record level of issuance in the quarter, the outstanding catastrophe bond market size has shrunk by roughly $431 million from the end of 2023 to $44.53 billion, which isn’t too surprising as January and February are often busy months for deal maturities.

At that level the market is still near a record size and outright growth is anticipated over the course of the full-year.

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 first-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.