Artemis records $7.1 billion of catastrophe bonds

Artemis.bm, the world’s leading source of news, analysis and insight on the growing insurance-linked securities, catastrophe bond and non-traditional reinsurance capital markets, has now recorded $7.1 billion of new catastrophe bond issuance and insurance-linked securities issuance in 2013.

Artemis.bm features a free to access record of transactions in the catastrophe bond and ILS market and has been recording market transactions since 1996. 

The Artemis Deal Directory has been visited by more than 160,000 readers this year already.

The 2013 catastrophe bond and insurance-linked security issuance is now confirmed at $7.1 billion. With more than $400m of additional risk capital scheduled to come to market before the end of the year 2013 should approach $7.5 billion by year-end.

This makes 2013 the year with the second highest level of cat bond and ILS issuance on record, after 2007.

The catastrophe bond and ILS market has broken one record in 2013, reaching an outright size of over $20 billion for the first time in its near 17 year history.

Steve Evans, owner and editor of Artemis.bm, said in a press release: “2013 has seen robust cat bond and ILS issuance, with investors keen to acquire new bonds helping almost every transaction to increase in size. 

“Investors have also helped sponsors of catastrophe bonds achieve better value for money risk transfer, with demand pushing down the pricing paid on practically every issuance we’ve seen this year.”

Interest

Investor interest in catastrophe risk, reinsurance and insurance-linked securities as an asset class has grown strongly throughout the year. Investor demand continues to outstrip supply of new cat bonds and investors are also becoming increasingly involved in supporting the global reinsurance industry through investments across a range of collateralized reinsurance vehicles.

Mr Evans added: “Reinsurance, particularly property catastrophe risks, are seen as an asset class in their own right now. Investors such as global pension funds are allocating more and more capital to the space as they seek a source of attractive investment returns which is practically uncorrelated with the movement of the stocks and bond markets.”

Investors contribute as much as $50 billion to the global catastrophe reinsurance market, a number that has been growing through 2013. 

With investors now also interested in other classes of reinsurance risk and other areas of the market that figure is expected to grow going forwards. The sector is hotly tipped by many investment advisors and consultants as one of the asset classes to watch in 2014.

He added: “The catastrophe bond and ILS market has reached a record high at $20 billion this year. Prospects for 2014 look good, with investor appetite high and a growing number of new sponsors accessing the market regularly. The market should continue to grow in 2014 and at Artemis.bm we are quietly confident that the overall reinsurance and ILS asset class will also continue to grow.”