In 2023, catastrophe bond and related ILS issuance hit a new a high of more than $16 billion, rising approximately $5.9 billion year-on-year and beating the previous high by almost $2.4 billion.

More transactions came to market in 2023 than any previous year as repeat, and an impressive number of new sponsors took advantage of favourable market conditions and tapped the capital markets for their reinsurance needs.

Against this backdrop, we spoke with Adderley about the past 12 months and whether the strong momentum will persist amid a still hard market environment.

“I didn’t expect this year to be as busy as it has been, it’s been crazy. I’m not sure anyone thought there was going to be more than 90 deals this year. So, personally, I’m surprised by both the number of deals and the size of total issuance,” said Adderley.

Another first for the market in 2023 was the arrival of cyber risk deals, first via some private placements before the market’s first full 144a cyber cat bonds were issued in the final quarter of the year.

“I’m also pleasantly surprised about cyber. Over the years, we’ve heard many rumours about new risks, but how often did it actually happen? The fact numerous cyber deals have been issued now is only a good thing for the market. And now that cyber has taken off, it shows that it is possible and perhaps people will start looking more seriously at other risks,” said Adderley.

“Developments like the cyber deals, that’s what we need, right. We need something different being done to cat in order to really grow the
market,” he added.

The Artemis Deal Directory already has a number of deals listed that are set to close in January, and from what Adderley has been hearing, the beginning of next year is likely to be busy for the cat bond market as well.

“So, it suggests that this is not a flash in the pan. Ok, 2024 might not be a record year after what we’ve seen in 2023, but if it’s still a really
good year, a busy year, it still builds on the momentum,” said Adderley.

“Add to this the fact I’m still reading and hearing more and more about sidecars and collateralized products, it’s a bit like a snowball effect. The cat bond market is pulling other things into it, which is allowing the entire fully funded space to grow. Which is what we want.

“So, I think next year is going to be really good for the market,” he concluded.

Click here to view the full report.

First Published In Artemis, January 2024

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