Catastrophe Bonds: More than Half Way to $4 Billion

By Gary Kerney April 25, 2013

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.

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Gary Kerney

Gary Kerney, one of the most prolific contributors to this blog, retired from Verisk in 2013. Mr. Kerney served as assistant vice president, Property Claim Services (PCS). Since joining PCS in 1981, he worked on catastrophe identification, loss estimating, and catastrophe response and mitigation.