For the second year in a row, catastrophe bond issuance has hit record levels, an annual tally from the Property Claim Services unit of Verisk Insurance Solutions has concluded.

Bond levels reached $7.8 billion in 2014, an 8 percent hike over 2013, according to data from the Deal Directory cited in Verisk Insurance Solution’s 2014 look at the sector. A large chunk of that money came in the fourth quarter alone, when sponsors raised more than $2 billion, an increase from $1.8 billion raised over the same period in 2013, Verisk said, citing data from PCS and Guy Carpenter.

The Verisk report said that 2014 was transformational as far as catastrophe bonds, and not just because of the $7.8 billion figure.

Among the cat bond firsts for the year: five catastrophe bonds of $450 million or more and the first European indemnity-triggered catastrophe bond (with Lion Re, sponsored by Assicurazioni Generali S.p.A.).

Verisk also noted that the market experienced a $1.5 billion catastrophe bond (via Everglades Re for Citizens Property Insurance Corporation), which ended up being the biggest of its kind in market history. A $750 million index-triggered catastrophe bond was also the largest of its kind to date. As well, 2014 was the first year ever with four catastrophe bonds covering Japan, Verisk said.

In addition, 2014 gave us the first year in which cat bond lite deals truly gained traction, with more than $200 million in new limits issued across three platforms.

Source: Property Claims Services; Verisk Insurance Solutions

Topics Catastrophe