September 4, 2019

Cat bond & related ILS risk capital outstanding hits $40bn for first time


The outstanding market for catastrophe bonds and related insurance-linked securities (ILS) has grown significantly in 2019 so far, passing $40 billion for the first time according to our data, as interest in mortgage ILS offset slower natural catastrophe bond issuance.

It’s a milestone worth celebrating for the insurance-linked securities (ILS) market, as risk capital outstanding reached a new high of over $40 billion this month, with the pool of insurance-linked investment opportunities and use of the cat bond structure expanding all the time.

Issuance of mortgage insurance-linked securities (ILS), where mortgage insurers securitize their policy risks and transfer them to the capital market to source reinsurance protection for their books, has helped dramatically.

In fact, it is largely mortgage ILS that has contributed the growth needed to take our measure of catastrophe bond and related ILS risk capital outstanding, based on the transactions recorded in the Artemis Deal Directory, to this new high.

In reaching the almost $40.1 billion of risk capital outstanding figure, the cat bond and related ILS market has grown by an impressive near 7% over the course of 2019 so far (click the chart below to analyse the data) and up around 12% in the last year.


So far in 2019 we’ve recorded over $7.7 billion of issuance, across 144a catastrophe bonds, private cat bond lite deals and the mortgage ILS transactions.

But within that 2019 issuance figure, the mortgage insurance-linked notes or mortgage insurance-linked securities (ILS) deals have accounted for almost half, at $3.675 billion year-to-date.

The other $4 billion or so is made of up of full Rule 144a catastrophe bonds and other property related cat bond lite or private ILS deals.

While $4 billion is far below the issuance levels seen by this stage of the year in the last few, it’s still impressive, we feel, given the catastrophe loss impacts faced by the market and the general reinsurance re-pricing that has been going on.

Mortgage insurance-linked securities (ILS) currently make up 13% of the outstanding market, according to Artemis’ data (analyse the data here).

To read more articles like this one, visit Artemis.


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