Catastrophe bond issuance for the 2018 first quarter soared to a new record, landing much higher than the previous year. The transactions have also gone largely international, according to a new report from Verisk’s PCS.

Insurers and reinsurers sponsored more than $3.1 billion in catastrophe bonds covering eight transactions for Q1. That’s a 34 percent rise from the 2017 first quarter, though few of the bonds were U.S.-focused, PCS said. Only $500 million of that total covered U.S. catastrophe bond issuance compared with $1.9 billion over the same period a year ago. Only one catastrophe bond completed in the first quarter had exposure to North America, PCS said.

Out of the eight transactions, four covered Latin America, used parametric triggers and accounted for more than a third of the total capital raised. Three transactions worth more than $1 billion covered protection for Japan risks, PCS noted.

Other details about Q1 insurance linked securities from the PCS cat bond market report:

  • Average transaction size for the quarter was $385 million versus $290 million in Q1 2017. Factoring in the Latin America and Japan transactions, four were at least $400 million.
  • Sponsors completed four cat bond lite transactions in the 2018 first quarter, up from three over the same period in the 2017 first quarter. Also, aggregate issuance activity for the sector during the quarter hit $132.6 million compared to $118 million in the 2017 first quarter.

The full report is called “The Quarter Everything Was Different: PCS Q1 2018 Catastrophe Bond Report.”

Source: Verisk/PCS