ILS issuance volume jumps in Q3

Global insurance-linked securities (ILS) issuance volume rose significantly year over year in the third quarter of 2018, according to the latest Bermuda ILS Market Report by the Bermuda Monetary Authority.

There was $2.5 billion of new risk capital issued via nine catastrophe bond deals – $1.6 billion higher than the amount issued during the same period last year, the report said.

Total issuance of $12.0 billion for the first three quarters of 2018 is the highest on record for this point in the year. In the third quarter, seven deals matured with a notional value of $1.3 billion. The $1.4 billion of net issuance increased the total stock of outstanding capacity to $36.9 billion which is a 23 percent increase year over year, according to the report.

The average deal size during the third quarter was $277.3 million, up from $145.6 million in the third quarter of 2017. The largest deal during the quarter, at $653.3 million in size, was issued by Bellemeade Re 2018-2. The deal will provide reinsurance protection to cover a portfolio of mortgage insurance policies related to 357,594 loans underwritten by Arch Capital. Also of note was the $500 million FloodSmart Re 2018-1 cat bond, which was designed to transfer a portion of the US National Flood Insurance Program (NFIP) risk to Capital Markets. The FloodSmart Re 2018-1 cat bond was the first to provide reinsurance coverage for flood risk and the ­first for the NFIP.