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Insurance-linked securities issuance hits $6.3 billion in second quarter

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The insurance-linked securities market saw $6.3 billion of new property/casualty issuances in the quarter ended June 30, a new second-quarter high, Willis Towers Watson Securities, the investment banking unit of Willis Towers Watson P.L.C., said in a report released Friday.

The $6.3 billion of property/casualty catastrophe bond capacity issued through 36 tranches during the second quarter of 2017 smashed the previous second-quarter record of $4.5 billion issued in the second quarter of 2014, and left last year’s second-quarter $1.0 billion issued through 17 tranches in the dust.

The record second-quarter issuance was driven by two of the largest-ever catastrophe bond transactions: Everest Re Group Ltd.’s Kilimanjaro II Re 2017-1, which totaled $1.25 billion over six tranches of notes, and the California Earthquake Authority’s $925 million Ursa Re 2017-1, the Willis report said.

Bonds outstanding at the end of the second quarter saw double-digit growth to $24.7 billion outstanding, up 16.5% year-on-year, according to the report.

Willis suggested that against the backdrop of a soft market, the record quarter may show the ILS market reaching a “tipping point,” commanding a growing share of the world’s peak catastrophe risk while myriad opportunities exist in the nonpeak catastrophe markets as well as in the, casualty, life and health sectors.

“The market has possibly never been in such robust health, with record-breaking issuance and competition continuing to increase amongst ILS fund managers,” Bill Dubinsky, head of ILS at Willis Towers Watson Securities, said in a statement accompanying the report.