CAT BOND ISSUANCE HITS RECORD $10.5BN IN 2017: PCS

Catastrophe bond issuance in 2017 reached a record $10.5bn, easily surpassing the previous record of $7.8bn set in 2014, according to a report by the Property Claim Services unit of Verisk Analytics. There were 36 cat bond deals completed during the year versus 20 in 2016, with the average size of transactions rising 3.6% to $290m. Those increases were driven by hurricanes Harvey, Irma and Maria and the two major wildfires in California, the report said. PCS said that that the industry previously used new lines of business, new geographic regions and innovation to pull through a “protected soft market” but that the recent avalanche of catastrophes will likely reduce innovation for new kinds of cat bond deals. “Innovative ideas took a back seat to sorting out a series of significant catastrophe losses – a process that may go on for a while,” the report said. The report noted that 32 of the 36 transactions for the year addressed North American risks, with a record eight involving Canadian exposures.