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A total of $6.8 billion of new insurance linked securities were issued in the first half of 2020, compared with $5.5 billion in new issuance during the first half of 2019, Swiss Reinsurance Co. Ltd. said Friday.
Capital outstanding, however, declined by 1.35% to $29.7 billion at end June 30, 2020 from $30.1 billion as of June 30, 2019, data from Swiss Re’s report showed.
This year saw a robust first quarter new issuance of $3.96 billion, besting the previous first quarter record high new issuance of $3.6 billion set in 2018, Swiss Re said.
The market saw a pause in March as the COVID-19 outbreak roiled markets, Swiss Re said. “The financial markets were extremely volatile during this time and the overall uncertainty of the world economic impact from COVID-19 created a pause in debt issuances including the ILS market,” the report said.
Markets, corrected weeks later, however. “After a few weeks of the equity downturn and fixed income sell-offs, the ILS market, like other markets, recovered and continued its new-issuance pipeline,” the report said.
One issuance highlighted by the report involved the catastrophe-linked bonds issued by the International Bank for Reconstruction and Development that came to market with four tranches, securing a total of $485 million for four years for Mexico earthquake, Atlantic named storm, and Pacific named storm on a parametric, per occurrence trigger for Mexico.
The modelling firm for the IBRD series was AIR Worldwide Corp., according to Swiss Re.
Catastrophe bond and related insurance-linked securities issuance has already surpassed $6 billion this year despite the COVID-19 pandemic, Artemis reported. More than $5 billion worth of risk capital was issued through 27 transactions during the first quarter, while new cat bond and related ILS issuances of more than $1 billion were completed in the second quarter.