Navigating the three Ts
According to the latest Bermuda ILS Market Report by the Bermuda Monetary Authority global insurance-linked securities (ILS) issuance volume rose significantly year over year in the third quarter of 2018.
The report said that a total of $2.5 billion of new risk capital was issued via nine catastrophe bond deals – $1.6 billion higher than the amount issued during the same period last year.
According to the BMA the 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.
BMA, report, ILS, issuance, 2018