Q1’24 catastrophe bond issuance rises 30% year-on-year to record $4.23bn: Report

Catastrophe bond issuance in the first quarter of 2024 reached a huge $4.23 billion, which is a record for the opening quarter of the year, and comes in 30% above the Q1 2023 total and 37% above the 10-year average for the quarter, according to our insurance-linked securities (ILS) focused sister publication, Artemis.

The Artemis Q1 2024 Catastrophe Bond & ILS Market Report, now available to download for free, dissects a record-breaking period for the marketplace on the back of record annual issuance in 2023, as investor and sponsor interest in the asset class remained strong.

All in all, 24 transactions comprised of 34 tranches of notes featured in the opening quarter of the year, and issuance was dominated by 144A property catastrophe bonds, which accounted for 92%, or $3.87 billion of total issuance.

The quarter also featured $98.6 million of cat bond lite issuance, which Artemis assumes also cover property risks, and also a $200 million healthcare transaction from prolific sponsor Aetna.

In each month of the quarter issuance was above the 10-year average, with March issuance setting a new record for the month at almost $2.3 billion.

Indemnity triggers once again dominated issuance, while investors took advantage of the peril diversification on offer in the quarter.

Last year saw cat bond spreads hit new heights, and while they did decline in the first three months of 2024, investors continue to benefit from favourable pricing dynamics. The report shows that the average spread above expected loss in Q1 2024 was 6.42%, which is down on Q4 2023’s 6.7%, and also the high of 9.41% in Q1 2023.

During Q1 2024, spreads, on average, declined by 8.2% from the mid-point of initial guidance, which suggests that deal sponsors took advantage of investor appetite and were able to achieve strong execution on deals.

On the back of very strong investor and sponsor appetite in the quarter, 14 tranches of cat bond notes grew in size while marketing, with some growing by more than 100% from their initial target size.

Despite the record level of issuance in Q1 2024, the outstanding catastrophe bond market size, as at the end of March 2023, did shrink by roughly $431 million from the high of $44.96 billion seen at the end of 2023. However, at $44.53 billion, the outstanding market size is still impressive, and has grown by $6 billion from the end of Q1 2023.

Download your free copy of Artemis’ Q1 2024 Cat Bond & ILS Market Report here.

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