Catastrophe Bond and ILS Market Posts Strong Second Quarter

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July 06, 2022 |

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The first half of 2022 was the third most active first half ever for property catastrophe (cat) bonds and other insurance-linked securities (ILS), according to a new report from Artemis.

According to the Q2 2022 Catastrophe Bond & ILS Market Report from Artemis, this year's first half saw $8.7 billion in new catastrophe bond and ILS issuance. Of that total, nearly $8 billion was in traditional catastrophe bond deals, Artemis said.

Artemis said the second quarter saw 24 transactions providing reinsurance or retrocession protection against a variety of catastrophe risks. Combined with three private ILS deals, second-quarter issuance reached approximately $5.2 billion. The 27 deals represented the second-largest number in the second quarter in the market's history, according to Artemis, only one short of the second-quarter record in 2017 and topping the 25 deals in the second quarter of 2021.

Second-quarter issuance came from a combination of prior and new market participants, the Artemis report said.

The second-quarter issuance brought the outstanding catastrophe bond and ILS market volume to a new record high of $38.2 billion as June ended, according to Artemis. "This is a strong result for a market that has been dealing with pressures from the macro-environment and its effects on broader capital markets and investor appetite," the report said. The prior record had been set 3 months earlier, with $37.5 billion in outstanding market volume at the end of the first quarter.

Almost $4 billion of the second quarter's cat bond and ILS issuance provided protection against US risks, Artemis said. Those exposures included California earthquakes, Texas and Florida named storms, and multiple perils in Louisiana.

"Outside of North America, Hong Kong domiciled reinsurer Peak Re's first ever cat bond provided investors with $150 million of Japan typhoon risk diversification," the Artemis report said. Meanwhile, a $150 million private placement secured coverage for all lines of business for Swiss Re.

July 06, 2022