In Swiss Re’s recent report highlighting key insights from the insurance-linked securities (ILS) market in 2023, the firm observed a surge in new sponsors entering the catastrophe bond market, alongside the return of several sponsors after a period away.
Throughout 2023, the market witnessed the entry of 13 first-time cat bond sponsors. Notable among these were reinsurers such as Conduit Re and Korean Re, both bringing US wind & earthquake risk to market.
The influx of new sponsors also brought about a shift in the mix of perils covered, with the introduction of some new perils.
Cyber risk was securitised in 144A catastrophe bond form for the first time in Q4, sparking considerable activity with four unique sponsors issuing cyber risk notes.
Furthermore, there was a notable increase in bonds covering ‘international’ perils.
Additionally, six sponsors returned to the market after an absence of five or more years, including global reinsurance giant Munich Re, marking its return to the cat bond market for the first time since 2016, along with other well-known firms like Chubb.
This underscores the enduring relevance and attractiveness of the cat bond market within the broader reinsurance space.
Swiss Re’s report also notes, “As inflation increased the cost of claims year-on-year, carriers managed their programs by holding more risk on their balance sheets as well as ceding more risk overall. As a result, the cat bond market became a more attractive option for securing an alternative source of capacity at competitive rates.”
For more details on these cat bonds and others, refer to the Deal Directory of our ILS-focused sister publication, Artemis.
