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Cat bond issuance strong in first half: Moody’s

cat bond

Catastrophe bond issuance remained buoyant in the first half of this year, with $7.7 billion in new issuance following a record year in 2021, according to a report released Friday by Moody’s Investors Service Inc.

Activity is expected to be robust for the remainder of 2022, Moody’s said.

First-quarter new issuance totaled $3.2 billion, the third-highest first-quarter total ever, behind 2020 and 2018.

Momentum continued into the second quarter, with new issuance of $4.7 billion, and Moody’s said that “with traditional reinsurance prices still rising, we expect issuance to remain strong during the remainder of the year.”

Last year saw a record $13.5 billion of new issuance, up from $11.4 billion in 2020, and more than double the total for 2019.

Issuance this year has centered around physical catastrophes, Moody’s data showed. Bonds providing coverage for international multi-peril and U.S multi-peril together have comprised 40% of issuance.

U.S. earthquakes have accounted for another 15%, followed by U.S named storm and hurricane at 6% and Japan earthquake at 5%.

Moody’s said it expects non-catastrophe issuances, such as terrorism risk and health care risk,  to increase as the ILS market continues to expand.

On Thursday, Aon PLC said first-half issuance reached $7.94 billion and that the market remains strong “as insurers and reinsurers increasingly turn to alternative capital markets to supplement traditional reinsurance.” It added that “looking ahead, the pipeline remains robust.”