Strong investor appetite enabled sponsors of traditional 144A catastrophe bond transactions to upsize target levels of reinsurance protection during the first-quarter of the year.
A factor of Q1 2021 catastrophe bond and related insurance-linked securities (ILS) issuance was the upsizing of property catastrophe deals.
Artemis’ data shows that during the period, 11 out of 13 tranches issued upsized from their initial target.
Driven by favourable market conditions and robust investor appetite for reinsurance-linked returns, sponsors secured an average upsize while marketing of 63% in Q1 2021.
As the chart below highlights, this is the third time in the past five quarters that, on average, 144A cat bond transactions issued have upsized by more than 50%.
During the most recent quarter, the $50 million Class B tranche issued via Sierra Ltd. (Series 2021-1) and the $150 million Class A tranche via Kizuna Re III Pte. Ltd. (Series 2021-1) were the only tranches to settle at their initial target price.
Starting at the lower end of the spectrum; both tranches of the Torrey Pines Re Pte Ltd. (Series 2021-1) transaction, sponsored by Palomar Specialty Insurance Company, upsized by 33% while marketing. With this deal, both the Class A and Class B tranches eventually settled at $200 million in size.
The California Earthquake Authority’s ninth transaction, Ursa Re II Ltd. (Series 2021-1), completed at $215 million after seeing its target size spike by 43%.
Both the Class A tranche…