The global catastrophe bond issuance market slowed significantly in the third quarter of 2022, resulting in below-average issuance for the period. But the outstanding market for catastrophic bonds is still $4.7 billion higher than the same period a year earlier, according to the latest quarterly report from Artemis.
The Q3 2022 Artemis Catastrophe Bond and Related Insurance Linked Securities (ILS) Market Report, available for download now, examines the catastrophe bond and related ILS venture capital issued during the quarter.
While the third quarter is typically the slowest of the year, the third quarter of 2022 was particularly slow, with new catastrophe bond issuance below average for the period.
At just $266.5 million from seven catastrophe bond deals, six of which were private or cat bond lite deals, Q3 2022 issuance was particularly weak and reached $666 million below average. over 10 years for the quarter.
Year-over-year, catastrophe bond issuance in the third quarter was down about $1.1 billion.
However, for the nine month period, it was a different story.
Combined with the strong level of issuance observed in the first half of the year, the lackluster third quarter nevertheless brought issuance for the first 9 months of 2022 to more than 8.9 billion dollars.
Data from Artemis reveals that over the past 10 years, the average level of cat 9M and ILS bond issuance has been around $7.6 billion, meaning that the issuance of 9M 2022 is still about $1.3 billion above average, despite one of the quietest Q3s on record. .
The catastrophe bond market did not grow in the third quarter of 2022, due to the low level of new issues.
In fact, at the end of September 2022, the outstanding amount of the cat bond market was $37.8 billion, which means that the market has shrunk by around $400 million, compared to $38.2 billion at the end. of the second trimester.
However, despite the decline in the second to third quarters, the exceptional market size reached more than $1.9 billion more than at the end of 2021, and the year-over-year growth is even more impressive, with the catalytic cat bond market now $4.7 billion higher. than it was at the end of the third quarter of 2021.
The reasons why the catastrophe bond market slowed more than normal in the third quarter was largely due to the widening of spreads seen in the second quarter which slowed issuances at the end of this period, which then lagged in the second quarter. third quarter and slowed emissions.
It is also worth considering the effect of investor flows in the second quarter, as they came earlier in the period and by the end of the first half, most cat bond funds were fully invested with little available cash and we understand that some planned issues had been postponed until later in the year.
We are now entering the fourth quarter, a period that had been forecast to be very busy for new issuances of catastrophe bonds. But, now that the ILS market is grappling with the fallout from Hurricane Ian, it will be interesting to see how this major catastrophic loss event will affect catastrophe bond issuance through the end of this year.
All of our catastrophe bond market charts and visualizations are up-to-date, so include this latest quarter of issuance data.
We will keep you updated on all catastrophe bond issuances and related ILS transactions as 2022 progresses, as well as any developments in the catastrophe bond market trends, catastrophe-related securities insurance (ILS) and guaranteed reinsurance.
For details on the third quarter 2022 catastrophe bond issuances and related ILS, including a breakdown of deal flow by factors such as perils, triggers, expected loss and pricing, as well as a analysis of emission trends observed by month and year.
Download your free copy of Artemis’ Cat Bond & ILS Market Report Q3 2022 here.
For copies of all of our catastrophe bond market reports, visit our archives page and download them all.
