Cat bond & related ILS to break Q2 and first-half issuance records

Cat bond & related ILS to break Q2 and first-half issuance records

After a flurry of catastrophe bonds launched in current days, it is now clear that issuance of new disaster bonds and other associated insurance-linked securities (ILS) tracked here at Artemis will break the record for the second-quarter and also the first-half of 2021. We described back in May that the marketplace for disaster bonds and associated insurance-linked securities (ILS) is set to break new ground for the first-half of 2021, with over $10 billion of issuance anticipated by us, according to our data on the marketplace at the time.
Now, things have sped up in the disaster bond market and total issuance of property disaster bonds, other line-of-business feline bonds, personal feline bonds and home loan insurance-linked securities (ILS), has actually currently hit just over $10.4 billion, which is an H1 record for those classifications of ILS offers.
The previous record, according to Artemis Deal Directory data, for first-half issuance of cat bonds, private feline bonds and home mortgage ILS stood at $9.76 billion from H1 2017.
Analyse feline bond and ILS issuance data using our interactive charts.
As we said, things have actually sped up and right now there are another approximately $1.29 billion of home cat bonds with a possibility of settling before the end of this month.
Thats from eight new 144A home disaster bonds that have actually all released in the last fortnight and are presently all slated for settlement prior to completion of June.
If all of these feline bonds were to settle before completion of June at their present marketed sizes, the overall issuance for the first-half of 2021 will reach a sensational practically $11.7 billion.
So nearly $2 billion greater than the previous first-half record embeded in 2017.
Its important to note here that mortgage insurance-linked securities (ILS) issuance has been far more powerful this year and accounts for the difference.
Pure 144A structured residential or commercial property disaster bond issuance will fall a little short of a record without some of the staying transactions upsizing.
Presently, were on-track for at least $8.1 billion of pure residential or commercial property cat bond issuance in H1, still a little behind the 2017 record for H1 of $8.5 billion.
That said, with eight offers still being marketed and at least five of those still having a chance of upsizing, we might see the first-half home feline bond record being broken if investor need continues to be as strong as it has been of late.
The roughly $11.7 billion of issuance that we might see by the end of the half would consist of just over $8.1 billion of 144A home cat bonds, $521 million of personal cat bonds, $350 million of feline bonds covering non-property risks (so life, health, contingency etc), and $2.6 billion of home mortgage ILS.
As breaking the first-half issuance record, current high levels of activity in the market likewise indicate the record for Q2 will be broken.
Currently were on-track to tape simply over $7.02 billion of issuance throughout the 4 classifications in Q2 2021, simply beating the $7 billion from Q2 2017.
Again however, it is home loan ILS that drive the outperformance this year, with pure residential or commercial property feline bond issuance in Q2 still lagging rather behind 2017, at around $5.6 billion versus $6.38 billion.
Issuance conditions for disaster bonds remain extremely attractive and sponsors are locking in significant reinsurance and retrocession capacity at eager prices, on multi-year terms right now.
As a result, its prepared for that issuance will continue to be vigorous through the rest of 2021, although we could see a typical lull during the peak hurricane season months.
That stated, we have currently become aware of some diversifying hazard deals that must come to market throughout the typhoon season, so even Q3 may turn out to be busier than an average year.
Execution of current disaster bonds stays strong, with cat bond multiples at market still hovering around levels last seen in 2019, while the marketplace spread above predicted loss has boiled down significantly.
If these issuance conditions persist, we must see a very hectic end to 2021 also, putting full-year records for issuance well in sight, even at this still reasonably early phase of the year.
Stay tuned to Artemis for news of every disaster bond and related ILS transaction that concerns market, along with other structures including reinsurance sidecars.
You can view information on every catastrophe bond released so far in 2020 and all prior years, totalling over 700 concerns, in the Artemis Deal Directory.
Keep up-to-date with the make-up of the catastrophe bond and ILS market using the Artemis Catastrophe Bond & & ILS Market Dashboard, created to be a simple and reliable tool offering essential information and statistics on every deal (there are 700+) included in our disaster bond & & ILS Deal Directory.
Analyse the current breakdown of the marketplace in our variety of charts, permitting you to view key stats on the feline bond market.

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