Market momentum for catastrophe bonds continued through the first quarter after last year’s record new issuance.

More than $3 billion of coverage has been issued in the 144A cat bond sectors since the beginning of the year, said Philipp Kusche, New York-based global head of ILS and capital solutions for TigerRisk Partners Inc.

That follows the record $12.8 billion in new issuance in 2021. 144A catastrophe bonds, which account for most cat bond transactions, are governed under the Rule 144A of the Securities Act of 1933. According to Artemis, they “are typically the more liquid type of cat bond deals, as opposed to cat bond lite transactions and privately placed cat bond deals.”

Mr. Kusche said the cat bond pipeline is the busiest he has seen in the past 10 years.

“Predictions made at the end of last year for this year have played out, and momentum has actually exceeded expectations,” he said. “We’re probably seeing two to three transactions announced every week.”

The transactions range from $50 million to $60 million up to $300 million to $400 million, he said.

The Sanders Re III Ltd., Series 2022-1, of notes from Allstate secured $550 million of U.S multi-peril coverage through April 2026, according to information on the Bermuda Stock Exchange.

“Directionally, that’s what happened,” with momentum continuing through most of the first quarter, said Paul Schultz, Chicago-based CEO of Aon Securities, a unit of Aon PLC.

Toward the end of the first quarter, the cat bond market had to begin to navigate both inflation and current geopolitical events, he noted.

While this one-two punch of uncertainty has not affected the performance of the asset class, fund and investment allocators now have additional variables affecting their distributions. “What’s happened globally hasn’t impacted performance but rather capacity and liquidity” in the market, Mr. Schulz said.

There were 10 traditional 144A transactions and several private deals totaling roughly $3.5 billion of risk capital deployed, according to Artemis.

The non-correlated nature of 144A catastrophe bonds, meaning they are largely not tied to general economic or market volatility, has been notably reaffirmed during the first quarter as other asset classes have seen substantial volatility, Mr. Kusche said. “Investors value that non-correlation,” he said.

“The non-correlation is certainly the fundamental reason investors continue to be interested,” Mr. Schultz said.

Reinsurers, Mr. Kusche said, have long been active in the cat bond market but appear to have increased their participation recently to meet capacity needs, particularly in the traditional retrocessional market. Primary insurers, he said, represent a faster-growing group of new catastrophe bond sponsors.

“We’re certainly seeing an increasing number of new primary insurance companies come to the capital markets,” he said.

The first quarter saw an active market from both primary insurers and reinsurers as well as governmental entities, Mr. Schultz said. “We’ve seen FEMA (Federal Emergency Management Agency) come into the market this year already,” he said.

Mr. Schultz added that rollovers of maturing transactions into new deals are still an important part of the market.

There was some “dislocation” in the retrocessional market at Jan. 1 renewals, leading reinsurers to be more interested in catastrophe bonds this year than in others, Mr. Schultz said.

“We saw some of that in first quarter and are likely to see it in second quarter as well,” he said.