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Property catastrophe bond limit placed in first-quarter 2021 declined 31.5% to $2.57 billion compared with first-quarter 2020, according to a report Tuesday from Aon Securities, part of Aon PLC.
This year’s first quarter, however, was still the third-highest, first-quarter quarterly issuance over the past 10 years.
First-quarter issuance consisted of nine property/casualty transactions by nine sponsors with an average deal size of $285 million, compared with 14 transactions by 13 sponsors in first-quarter 2020 with an average deal size of $268 million.
Property catastrophe bonds outstanding increased $450 million to $31.5 billion at the end of the quarter.
Investors appear to favor per-occurrence triggers to aggregate and are “looking to put cash to work,” Aon said.
“We believe that the elevated pipeline will continue in Q2 and Q3 2021,” with the market seeing “positive momentum” for the remainder of 2021.
Issuance of property catastrophe bonds in 2021 is expected to surpass 2020’s record levels and reach $12 billion, as an increasing number of maturing cat bonds are likely to be renewed, Artemis reported. Entry of new sponsors is also expected to drive the cat bond market, keeping it bustling with activity throughout 2021, after the market topped $10 billion in 2020.