The insurance-linked securities market issued $7.42 billion in new securities in 2013, second only to the $8.24 billion in 2007, Swiss Re Ltd. said Wednesday.
In a report titled “Insurance Linked Securities Market Update,” Swiss Re said the $20.2 billion outstanding at year's end was the highest ever and roughly 20% more than 2007.
During the second half of last year, $3.45 billion in such securities were issued, which also was second only to 2007.
The average catastrophe bond deal was the highest on record at $425 million in 2013, surpassing the $236 million average in 2007, Swiss Re said.
U.S. hurricane exposure was the largest category of risk covered, accounting for about 65% of new issuance, the report said. However, the market also saw other risks covered, such as French and European windstorms, Australian cyclones, and earthquake coverage in United States, Australia, Canada, Japan and Turkey.
Seven new sponsors, including New York's Metropolitan Transit Authority and Australia's QBE Insurance Group Ltd., utilized ILS markets in 2013, along with 21 returning sponsors.
The seven newcomers “embraced the favorable conditions and realized the complementary advantages offered through ILS issuance, accounting for approximately 20% of the total issuance in 2013,” Swiss Re said in the report.
“The cat bond market has now grown by close to 50% from its post-financial crisis low set in 2011. 2013 has demonstrated to the market that cat bonds remain a growing and highly sought after product,” Swiss Re said in the report.
“With favorable market conditions and close to $4 billion of bonds set to expire in the first half of 2014, Swiss Re anticipates a strong issuance pipeline in the coming months potentially leading to continued market growth,” the reinsurer said in the report.