Cat bond issuance soared in 2020

Catastrophe bond issuance hit record levels in 2020, more than doubling the issuance in 2019, Aon PLC said in a report Wednesday.

Last year, $11.02 billion in property cat bond limits was placed in the market, compared with $5.38 billion in 2019 and exceeding the $10.16 billion placed in 2017, the previous record year.

The 2020 placement total comprised 46 transactions completed by 36 sponsors with an average deal size of $239 million. That compared with 23 transactions by 21 sponsors with an average size of $234 million in 2019.

Insurers and large policyholders use cat bonds as an alternative or complement to traditional reinsurance programs.

“We still see a preference for cleanly structured deals from high-quality sponsors, and investors still seem to favor per occurrence over aggregate triggers as a result of the most recent loss events,” the Aon report said.