A lot has changed in only a few weeks. After a slower than expected start in the first quarter, the catastrophe bond market has gained momentum quickly. If the current announced transactions close without upsizing, year-to-date issuance will reach $2.5 billion, according to data in the Artemis Deal Directory, with $1.7 billion of it coming in the first few weeks of April. That would put the catastrophe bond market more than half way to what would be a record-setting $4 billion in original issuance by the middle of the year.
Not including the $61 million Skyline Re transaction — the first of 2013 — this year’s catastrophe bonds have generally exceeded the 2012 average deal size of $234 million. Pelican Re, the latest catastrophe bond from Louisiana Citizens, is the only other transaction to fall short of last year’s average, but it may upsize from $100 million to $140 million. Both Tar Heel Re and Bosphorus 1 Re upsized significantly, the latter from $100 million to $400 million in a matter of weeks. With larger catastrophe bonds coming to market, the $4 billion threshold becomes more attainable.