News

Record cat bond issuance assessed

Friday 21 April 2017 12:34 London/ 07.34 New York/ 20.34 Tokyo

The average size of catastrophe bonds climbed significantly - by 31% - to US$292m in 1Q17, according to PCS figures. The firm notes that the issuance of the Galilei Re, Aozora Re and Sanders Re transactions had "disproportionate effects" on volumes (see SCI's primary issuance database).

"Half the transactions [issued in Q1] were small (under US$200m) and it took two large transactions of around US$500m to lift aggregate limit to the year's record-setting issuance of US$2.3bn," PCS explains.

ILS sponsors completed eight deals last quarter, versus nine in 1Q16. Seven of the eight deals had exposure to North America, with Galilei Re including Canadian and European risks. One catastrophe bond covered risks in Japan.

Meanwhile, three cat bond-lite transactions were issued in the first quarter - ranging from US$5m to US$63m in size - totalling US$118m. Two of these deals featured indemnity triggers and one - Alpha Terra - covered non-US risk only (SCI 15 February). Sponsors also completed five private transactions.

PCS points out that ILS market demand for new risk areas and types remains significant. "Conversations throughout the 1 January 2017 renewal and after have emphasised the interest the ILS market has in lines such as global marine and energy, terror and cyber, among others. The launch of PCS Global Marine and Energy should help satisfy this need by bringing more original risk to market, with subsequent loss aggregation solutions likely to help the market expand further," it concludes.

21/04/2017 12:34:17