This December marks the twenty fifth anniversary, or silver jubilee, of the issuance of a landmark disaster bond transaction, the George City Re Ltd. deal, since when Artemis has tracked nearly $135 billion of cat bond issuance.
The George City Re Ltd. disaster bond, which got here to market in December 1996, is usually thought-about the primary true, extensively syndicated, cat bond transaction, so options closely within the reminiscences of lots of these concerned within the insurance-linked securities (ILS) market since its inception.
Whereas Artemis didn’t really exist on the time the George City Re cat bond was issued, the Artemis Deal Listing did, however as a single web page of one other insurance coverage and reinsurance market centered net portal that I managed on the time.
There, I started to gather knowledge on and particulars of each disaster bond issuance I may glean data on, with that single web page changing into the premise for Artemis’ launch in early 1999.
Twenty-five years after I started this assortment of ILS market knowledge, cumulative issuance of disaster bonds (together with Rule 144A property cat bonds and cat bonds overlaying life, well being, specialty, or different strains of insurance coverage and reinsurance enterprise, in addition to some non-public cat bonds), has now reached an unbelievable nearly $135 billion.
The George City Re cat bond didn’t have the simplest trip over the lifetime of its protection and in the long run a small, lower than $1 million payout was made to its sponsor St Paul Re, after a spread of disaster occasions triggered the deal to be triggered.
The triggering of George City Re took place after 1999’s Hurricane Floyd, in addition to European Windstorms Anatol, Lothar and Martin, in addition to impacts from the 2000 UK Floods, and the 2001 assault on the World Commerce Centre.
George City Re was not typical of disaster bonds seen at this time, given its quota share nature of the underlying reinsurance, plus its construction and lack of what we’d name a coupon at this time.
However, because the very first cat bond listed within the Artemis Deal Listing and one we tracked via to issuance on the time in 1996, it’s actually memorable for us and for these others lively within the insurance-linked securities (ILS) area on the time.
In whole we’ve tracked the issuance of greater than 800 disaster bonds and equally structured ILS transactions in our Deal Listing over the twenty-five 12 months interval, of which round 760 make up the $135 billion of cumulative issuance detailed in our chart (because it excludes mortgage ILS and some different reinsurance securitization transactions).
With disaster bond issuance once more setting data in 2021 and the market wanting ahead to a busy 2022 as properly, it’s totally potential cumulative issuance may close to the $150 billion mark by the tip of subsequent 12 months.
The George City Re disaster bond began a fascination with the usage of monetary market know-how to allow the switch of insurance coverage and reinsurance associated dangers to capital market traders in a type that might be assumed extra simply by their funds and mandates.
Whereas issuance of $135 billion over the twenty-five 12 months’s since George City Re is spectacular, we nonetheless imagine that as know-how improves, issuance prices come down and monetary market securitization turns into extra readily achievable, that the following twenty-five may see a far greater quantity of issuance.
Joyful Christmas all people and finest needs for the New Yr forward!
Entry all of our charts breaking down the disaster bond and associated insurance-linked securities (ILS) market right here.