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Catastrophe bond issuance totaled $4.03 billion during the second quarter of 2018, the third-largest second-quarter total recorded, but behind last year’s record second quarter of $6.38 billion, according to a report Monday from Aon Benfield.
Maturing volume of roughly $3 billion was more than replaced by the new issuance, the report noted, adding that “the second quarter of each year is typically the largest for catastrophe bond issuance volume, as relatively large amounts of U.S. wind-exposed capacity is purchased.”
The report also noted that overall alternative capital rose 7% to $95 billion and now represents 16% of the total $610 billion of reinsurer capacity as of March 31, up 1% from the end of 2017.
The Travelers Indemnity Co. Long Point Re III Ltd. 2018-1 was the largest bond of the quarter, securing $500 million of indemnity-based coverage through June 2022 from Northeast hurricanes, earthquakes, severe thunderstorms and winter storms.
Just behind was the Texas Windstorm Insurance Association, which used the Alamo Re 2018-1 bond to secure $400 million of indemnity-based coverage for Texas hurricanes and severe convective storms through June 2021.
French reinsurer Scor S.E.’s Atlas Capital UK 2018 is the first deal to be domiciled in the U.K. and benefit from the new London insurance-linked securities regulatory regime, the Aon Benfield report said.
The $300 million bond secures four years of parametric-based coverage for U.S. named storms, earthquakes, Canadian earthquakes and European windstorms.
“Given the 2017 U.S. wind loss events, this strong result evidences the continued utility of catastrophe bonds for sponsors and investors alike and demonstrates the continued robustness of the insurance-linked securities sector,” the Aon Benfield report said.
Global catastrophe bond and insurance-linked securities' total outstanding risk capital grew to more than $35 billion at the end of June, up 20% from June 30, 2017, Artemis.bm reports. Cat bond and ILS issuance totaled $10 billion so far in this year. The cat bond and ILS market' issuance had also totaled $10 billion in July 2017.