Catastrophe bond issuance hit $2 billion during the first three months of 2016, making it the most active first quarter in market history, according to the latest report from the Property Claim Services unit of Verisk Insurance Solutions.
The number reflects a 35 percent jump from the 2015 first quarter, when total cat bond issuance landed at $1.5 billion. Average transaction size also climbed approximately 5 percent higher.
For Q1 2015, the $2 billion came through in 9 transactions, seven of which were from North America, valued at $1.6 billion. The two others had indemnity triggers and were focused on Jan. During the same period a year ago, there were seven total transactions, 6 of which were issued with North America exposure and worth $1.2 billion.
According to the report, all nine cat bond sponsors during the 2016 first quarter had previous experience with the market, something that the report suggests might be part of a larger trend.
“The stability in the sponsor base suggests a certain consistency indicating that some sponsors have truly integrated the use of catastrophe bonds into their global risk and capital management strategies,” the ISO report noted.
Other details from the report:
- Of Q1’s seven North American catastrophe bonds, two were completed with coverage for Canada – the same two from the 2015 first quarter. Capital raised by catastrophe bonds that included cover for Canada reached $600 million, versus $350 million in Q1 2015.
- Catastrophe bonds with data from PCS accounted for nearly 60 percent of the limit raised during the last quarter, and two-thirds of the transactions. This excluded Akibare Re and Azora Re, which did not cover any North American risk.
- Two first-quarter cat bond transactions used PCS for independent catastrophe designation in indemnity triggers. One was Espada Re, a veteran catastrophe bond sponsor involved in a first-time issuance. This deal brought in $50 million in fresh capital. The other, from Caelus Re, raised $300 million.
The full report is called “Déjà vu: PCS Q1 2016 Catastrophe Bond Report.”
Source: PCS/ISO/Verisk Risk Solutions