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H1 cat bond issuance a record $8.5B: Swiss Re


A record $8.5 billion of catastrophe bonds were issued in the first half of 2021 as the market benefitted from new sponsors and increased capital inflows, according to a report Wednesday from Swiss Reinsurance Co. Ltd.

Market demand for the catastrophe bonds was strong as “investor sentiment throughout the first six months of 2021 led to fundraising,” Swiss Re said.

Vermont Mutual Insurance Group was among the new sponsors of a first-half issuance with its Baldwin Re 2021-1 A, which secured $150 million of cover for U.S. wind, earthquake, severe thunderstorm, wildfire on an indemnity trigger.

Such new players should continue to bolster the market, according to Swiss Re. “New sponsors contributed to the growth of the market and more new entrants are expected to again consider the catastrophe bond market for competitive pricing conditions through the second half of 2021.”

The first half also saw repeat and serial issuers including San Antonio-based United Services Automobile Association, known as USAA, with its Residential Re 2021-1, which secured $100 million in cover for tropical cyclone, earthquake, including fire following; severe thunderstorm; winter storm; wildfire; volcanic eruption; meteorite impact; and other perils, including, in each case, flood losses arising from automobile policies and renters policies; on an indemnity trigger.

USAA is one of the top five sponsors in the history of the ILS market, according to Swiss Re, and has sponsored more than $8.5 billion of issuance since 1997.

Market momentum should continue into the second half, Swiss Re said. “With an impressive start to the year, the ILS market could once again post a year-end issuance total above $10 billion.”