Catastrophe bond market will set new issuance records in 2023

Annual global catastrophe bond and related insurance-linked securities (ILS) issuance is officially on-track to breach $14 billion for the first time ever in 2023, while traditional 144A property cat bond issuance will also reach a new record high, according to Artemis’ market data.

Catastrophe bond issuance has already been exceptionally strong this year, with completed 2023 issuance currently sitting at more than $11.4 billion, which is roughly $1 billion higher than total 2022 issuance, and already the fourth highest on record for a single calendar year.

But, as shown by the Artemis Deal Directory, there are currently 15 new cat bonds still waiting to price or settle which are all scheduled to be completed before the end of this year.

Together, these additional 15 cat bond deals amount to roughly $3.2 billion in risk capital to be added to the annual total.

If they all close at their current sizes before December 31st (some could still upsize and more could still emerge), it will take total 2023 issuance to around $14.6 billion, which will set a new annual issuance record for the catastrophe bond sector.

This is across 2023 calendar year issuance of full Rule 144A property catastrophe bonds, 144A cat bond deals that cover other non-cat risks, such as life or specialty lines of business, and also any private cat bond transactions Artemis has tracked.

The previous annual issuance record reported by Artemis was set in 2021, when 83 transactions brought just under $14 billion of cat bond risk capital to market.

The chart below shows total cat bond and related ILS issuance since the market’s inception.

The green section of the 2023 bar highlights the deals expected to settle before year-end, showing that total issuance will move above the $14 billion mark for the first time ever.

This year has already seen 72 cat bond transactions issued, and with 15 more expected to complete ahead of year-end, 2023 will also be the most active year in terms of the number of deals issued and recorded in the Artemis Deal Directory, which at 87 would be above the previous record of 83 seen in 2021.

As is the case in any year, issuance of full Rule 144A property cat bonds will dominate 2023’s deal volume.

If all remaining deals close as currently projected, then 2023 will also see a new annual record set for the issuance of 144A property cat bond deals, further underscoring the very strong market conditions currently being seen.

Currently, 144A property cat bond issuance stands at around $10.5 billion, which is already the third highest ever seen in a single year after $12.5 billion in 2021 and $11 billion in 2020.

However, all but two of the 15 deals listed in the Artemis Deal Directory that are yet to settle are full Rule 144A property cat bond transactions, with a combined value of roughly $3.1 billion. The other two are the market’s first Rule 144A cyber cat bonds, from AXIS and Beazley.

Once all these deals are completed and live, 144A property cat bond issuance in 2023 will amount to over $13.5 billion, setting a new high and beating the previous record by more than $1 billion.

The chart below shows issuance of full Rule 144A property cat bonds. Again, the green section of the 2023 bar highlights the transactions waiting to settle, and shows that issuance is projected to be above $13 billion for the year.

During the ten-year period 2013-2022, the average level of 144A property cat bond issuance and total cat bond and related ILS issuance tracked by Artemis, were $8.5 billion and $9.7 billion, respectively.

Which means that, as things stand, Rule 144A property cat bond and total cat bond and related ILS issuance are on track to exceed their 10-year averages by 58% and 50%, respectively, in 2023.

The outstanding catastrophe bond and related ILS market is already at an all-time high of more than $42.1 billion, according to Artemis’ data. There is still a lot of cat bond maturities to come by year-end, so further growth in outstanding may not be seen, or at least may not be significant.

Stay tuned to Artemis as we move through the final weeks of the year for details of each cat bond as it prices and settles, as well as news on any new cat bonds that come to light, which could raise these forecasts for year-end totals even higher.

The Artemis Deal Directory lists all catastrophe bond and related transactions completed since the market’s first deal in the late 1990’s. The directory also lists the cat bonds waiting to settle, which are highlighted in green at the top of the list.

Analyse the catastrophe bond market using our charts and visualisations, which are kept up-to-date as every new transaction settles.

Download our free quarterly catastrophe bond market reports.

We track catastrophe bond and related ILS issuance data, the most prolific sponsors in the market, most active structuring and bookrunning banks and brokers, which risk modellers feature in cat bonds most frequently, plus much more.

Find all of our charts and data here, or via the Artemis Dashboard which provides a handy one-page view of cat bond market metrics.

All of these charts and visualisations are updated as soon as a new cat bond issuance is completed, or as older issuances mature.