The number of independently put disaster bond transactions released in the first-quarter of 2021 is the most ever tape-recorded for the duration and guaranteed that once again, the dollar-value of issuance from these cat bond lite offers came in above the ten-year average for the period.Artemis Q1 2021 catastrophe bond and insurance-linked securities (ILS) market report shows that in the opening quarter of the year, 13 specific private, or cat bond lite deals were provided with a combined value of around $238 million.
As revealed by the Artemis Deal Directory, 13 private deals is the most experienced in the first quarter of any year; surpassing last years 11 and is also more than double the ten-year average of 6.1 deals.
Year-on-year, private feline bond issuance increased by $128 million in Q1 2021, making it the 3rd most active first-quarter, in terms of danger capital released, in the markets history.
The chart listed below highlights that, the level of feline bond lite issuance seen in Q1 2021 lags just the $258 million seen in 2019 and the record $411 million seen in 2017.
A personal positioning offers financiers and sponsors with a structured, low-friction and more affordable ways of accessing disaster bond-backed reinsurance protection.
While typically smaller in size than conventional 144A cat bond deals, cat bond lites are progressively larger than $50 million in size, with some nearing and even striking $100 million.
That being said, in Q1 2021, the typical size of cat bond lite issuance totaled up to simply $18.3 million. While this is above the $9.9 million posted in Q1 2020, it stays below the $25.8 million taped in 2019, and the $46.5 million and $41.1 million reported in 2018 and 2017, respectively.
The reality these offers are independently positioned ways that often, little details is offered to us and often we are just able to acquire the name, provider, and size of the deal. Where possible, Artemis tracks both the trigger structure and peril class of feline bond lite deals.
Throughout the first-quarter of 2021, 9%, or around $21 million of personal feline bond issuance leveraged a parametric trigger structure; while we do not have trigger information for the remaining 91%.
For contrast, in Q1 2020, roughly 17% of private cat bond issuance included a parametric trigger structure. Last years Q1 also supplied financiers with higher trigger diversity when compared to this year, as simply over 6% of issuance leveraged a market loss trigger; while we do not have trigger details for roughly 77% of Q1 2020 issuance.
So, as holds true with traditional 144A positionings, trigger diversification is evident in the cat bond lite area. And, significantly, so too is peril diversity.
Sponsored by the Danish Red Cross, the $3 million privately put Dunant Re IC Limited (Series 2021-1) catastrophe bond deal is the very first in the history of the cat bond market, so consisting of 144A offers, to cover pure volcanic threat.
This deal only accounts for a little more than 1% of issuance, it did supply financiers with both danger and trigger diversity in the opening quarter of the year.
Roughly 8% of Q1 2021 cat bond lite issuance covered Japan earthquake risk. 34% provided security versus unknown home disaster threats, and 57% used protection versus U.S. property disaster threats.
As the Artemis Deal Directory reveals, its common in any quarter for independently positioned offers to be controlled by a mix of unknown and U.S. property catastrophe risk. Diversity is almost always present and this is something which has likely helped these deals gain traction and increase their contribution to overall catastrophe bond issuance.
Stay tuned to Artemis as we move through the second-quarter of 2021, which is anticipated to be a hectic period for new disaster bond issuance and well detail every transaction in our Deal Directory.
Well keep you updated on all disaster bond and associated ILS transaction issuance, along with developing trends in the feline bond and insurance-linked securities (ILS) market.
For full information of first-quarter 2021 cat bond and related ILS issuance, including a breakdown of deal flow by factors such as perils, sets off, anticipated loss, and rates, along with analysis of the issuance trends seen by month and year.
Download your free copy of Artemis Q1 2021 Cat Bond & & ILS Market Report here
For copies of all our catastrophe bond market reports, visit our archive page and download them all.