Catastrophe bond market records are descending in 2024 and set to be beaten on most fronts, as overall issuance recorded in our insurance-linked securities (ILS) focused sister publication, Artemis’ Deal Directory, is set to hit a new high of almost $17.7 billion for the year.
This remarkable figure also includes a record $17.24 billion of Rule 144A cat bonds, which has helped drive a new end-of-year market record and cat bond market growth of 10%.
The outstanding market, across 144A property catastrophe bonds, 144A cat bonds covering other lines of insurance and reinsurance business, including cyber, and also the private cat bonds that Artemis tracks, is now projected to reach $49.5 billion.
As a result, this represents more than 10% growth of catastrophe bond risk capital outstanding since the end of 2023, across those categories of deals.
On the other hand, while the number of deals issued and tracked by Artemis is set to fall slightly behind last year’s 95, reaching 93 once two issuances that are yet-to-settle are included, this will still result in 2024 recording the second highest number of new issues in all the time that Artemis has been analysing the cat bond marketplace.
Overall, total issuance tracked by Artemis, across 144A property cat and other line of business cat bonds, as well as private cat bonds, is set to reach a new record of almost $17.7 billion for 2024, representing a 7.4% increase from the previous record set a year ago.
You can view (below) Artemis’ chart that tracks catastrophe bond issuance, the size of the outstanding market and the number of new cat bond deals by year, which shows this projected total of nearly $17.7 billion if you add together the settled issuance so far and the pipeline of new deals that all settle and come into the market this week.
Focusing only on the 144A catastrophe bonds that were issued in 2024, the total is set to reach almost $17.24 billion by the end of this year, which represents a 9% increase on the previous record amount of annual issuance set in 2023.
In addition, the core of the market remains Rule 144A property catastrophe bonds, and here the record set in 2024 is even more remarkable.
In fact, 144A property cat bond issuance for 2024 is set to reach a substantial almost $16.6 billion, which is almost 11% up on the previous record from 2023.
It’s worth noting, that with that core of the cat bond market (144A property cat deals) still expanding, in part to more larger issues, increasing numbers of new cat bond sponsors and increasing investor interest, as well as new cat bond funds having been launched to increase the capital supply, it appears that that cat bond market will see another strong year in 2025.
However, one key fact about 2024 catastrophe bond issuance though, is that the second-half of the year and the third and fourth quarters in isolation, have not broken issuance records.
In fact, all of the growth of the market came during the first-half of this year. H1 issuance tracked by Artemis reached over $12.6 billion.
On the other hand, the second-half of 2024 will mark only the second time that H2 has seen more than $5 billion of new cat bonds issued.
It’s also worth noting, that with more than $10 billion of catastrophe bonds maturing in H1’25, the market is going to have a substantial amount of cash and liquidity coming back that will likely need recycling into new cat bond investment opportunities.
All in all, this is a strong signal for sponsors – and potential cat bond sponsors too – that execution across the catastrophe bond market is likely to continue to be favourable for protection buyers, with both investors and fund managers able to support large deal sizes over the coming months ahead.
The Artemis Deal Directory lists all catastrophe bond and related transactions completed since the market was formed in the late 1990’s. As well as this, the directory also lists cat bonds that are waiting to settle, which are highlighted in green at the top of the list.
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