Cat bond issuance soars in H1: Swiss Re

New issuance of catastrophe bonds during the first half of 2023 set records for both dollar amount at $9.85 billion and deal total with 64 tranches of notes, according to a report Monday from Swiss Re Ltd. 

First-half issuance has already exceeded that for all of 2022 along with making 2023 the fourth-highest year for new issuance with six months left, the report said.

The first quarter kept pace with historic new issuance levels, but issuance in the second quarter “skyrocketed,” Swiss Re said.

One driver was the continued challenges faced by those seeking capacity in traditional reinsurance and retrocession markets, where reinsurers transfer risk. “Sponsors found the cat bond market as a great alternative but an even better complement to a hardening traditional reinsurance market,” the report said.

The robust trajectory of the catastrophe bond market is expected to continue into the second half of the year, in the absence of any major loss events, the report said.

“Barring any events, we believe there is a strong chance that 2023 will be a record-breaking year in both the size and number of new issue bonds,” the report said.