February 23, 2024

Before the end of the quarter, Artemis can now report that first half 2023 real estate catastrophe bond issuance will end June at an all-time high of nearly $9.7 billion, more than the full year since 2022. The total amount of bond issuance hit a new record for catastrophe bond issuance in the second half of the year.

As we reported in May, conditions appear ripe for a new cat bond market record in 2023, with issuance accelerating into the second quarter and reaching a record pace.

Artemis now reports that the use of cat bonds to transfer real estate cat risk in the form of reinsurance and retrocession has become mainstream in recent months, driving pure-play 144a real estate cat bond issuance to record highs.

Sponsor demand for underwriting in a tough reinsurance market environment, and the value of cat bonds, has been a key driver, with both established and new sponsors tapping capital markets this year.

As detailed in our quarterly report, at the end of the first quarter, real estate cat bonds were running slightly below year-ago levels (stay tuned for a new edition next week).

But the issuance environment for cat bonds was particularly strong in the second quarter, with high demand for guarantees from sponsors met by ample capital and new investor inflows, as well as high maturities to generate capital recycling into new deals, all of which combined to lead to catastrophe issuance of bonds. The cat bond market is going through a period of phenomenal growth.

According to the transactions we track Our Artemis Deal Directory Year-to-date, including all real estate cat bonds that will settle by July, we can now report that real estate cat bond issuance will reach nearly $9.7 billion, a new semi-annual record (ie, any half).

To show you what one of our charts looks like, once all trades are settled (we only add data after trades have been sent), the chart below shows the half-year point split.

2023 catastrophe bond hits record

Impressively, this makes 2023 the fourth-highest year on record for real estate catastrophe bond issuance.

It also means that the issuance of real estate catastrophe bonds in 2023 will exceed the total issuance volume of 2022 in the first six months alone.

Now, that’s just the 144a real estate catastrophe bond market that we’ve mentioned so far.

Add cat bonds that cover other insurance or reinsurance business, and private cat bonds that we track (simplified cat bonds), so basically everything that’s recorded in our cat bonds transaction directory By the end of June settlement, the half-year total reached 10.34 billion US dollars, which is also a new record for any half-year in the history of the market.

As a result, the first six months of 2023 are now officially the strongest first or second half of any year on record since we began tracking the cat bond market in late 1996.

It all adds up to a particularly impressive first-half performance for the cat bond market.

Now, sources are calling for a near-unanimous call for record catastrophe bond issuance in 2023, and our sources continue to hint at a robust issuance pipeline ahead.

The cat bond market is growing strongly, with almost $3.7 billion more by midyear than at the end of 2022, a testament to the strength of the cat bond market and the ability of investment managers to generate support for sponsor demand given the longer maturities seen the required funds.

Analyze the cat bond market with our charts and visualizations, which are kept up to date with each new trade settlement.

Download our free quarterly catastrophe bond market report here.Our new report will be published in early July.

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