After a record-breaking 2023 and first half of 2024 for cat bond issuance, it’s been a subdued third quarter for the space, with issuance driven by private deals and yet another cyber cat bond, with just one 144a property cat bond placed.

That being said, issuance in 2024 has already surpassed the $13 billion mark, which has only happened twice previously, so it’s clearly still going to be a strong year for the
marketplace.

“On the cat bond side, it all seems very positive,” said Adderley. “I don’t think it’s going to be a record fourth-quarter or record year, but honestly, that’s ok. It’s not a sign of doom and gloom at all.”

As of mid-September, explained Adderley, there were a lot fewer quotes for new deals going out than last year, which supports the notion that it’s not going to be a record fourth quarter or year in terms of issuance volume.

“But what I like is that this is more normal. Think back just five years ago, there was still a lot of talk around what’s a cat bond? How can this structure benefit me? But now, there’s consistently new players, bigger deals, returning players, and new risks, just think of all the cyber cat bonds in the market.

“I think that this is just changing normally. For years, it was all new and exciting, but now it’s just a normal thing for a cedent to do. And that’s because of time, because of growth, because of new investors.

“Ultimately, it’s more mainstream, it’s more normal now, and to me, that’s what is impressive. That is the bit I like,” said Adderley.

In addition to the positive outlook for the cat bond sector, Adderley highlighted more movement around sidecars.

“People talking about sidecars in September gives me the impression that they are actually going to happen. It’s not like a last minute, let’s see if I can do something thing, it’s actually more of we’re going to do this, which means there will be sidecars, which is another positive for the market,” he said.

We spoke with Adderley shortly after the annual meeting of the reinsurance industry in Monte Carlo, and while the cat bond discussions he had were positive, he was less impressed with the noise around potential market softening.

“Is seven years of a soft market, seven years of pricing going down and terms going down, offset by one and a half years of, shall we call it better pricing? For my purposes, how can we, as a market, when we hear about investors not wanting to come in and investors needing to see that it’s a viable community and so on, after a year and a half, talk about softening?” questioned Adderley.

“Remember, this market is not driven by losses. It’s driven by people being fed up, inflation and social inflation and everything else. So, how can we, knowing what we just went through, even consider the term softening. I am hoping the strong pricing levels will continue into 2025,” he concluded.

Click here to view the full report.

First Published In Artemis, October 2024

Share
X.com LinkedIn Email Save as PDF
More Publications
Appleby-Website-Banking-and-Financial-Services
19 Feb 2025

Recent Updates on BVI, Cayman and Bermuda laws

Entities incorporated or registered in the British Virgin Islands (BVI), Cayman Islands and Bermuda ...

Appleby-Website-Employment-and-Immigration
18 Feb 2025

Fostering Respect: the Importance of Bullying and Sexual Harassment Policies in Bermuda (Part 2)

Under the Employment Act 2000 (EA), it is a requirement for an employer to not only have a compliant...

Technology and Innovation
31 Jan 2025

Bermuda Monetary Authority’s 2025 Tech Commitment

A focus on the crucial and enabling role that technology plays across all financial service sectors ...

Fund Finance
29 Jan 2025

Fund Finance Laws and Regulations 2025 – Bermuda

The Bermuda fund industry sees investment predominantly from North America and Europe, and therefore...

Employment-and-Immigration
23 Jan 2025

Fostering Respect: the Importance of Bullying and Sexual Harassment Policies in Bermuda (Part 1)

Under the Employment Act 2000 (EA), it is a requirement for an employer to not only have a compliant...

Appleby-Website-Insurance-and-Reinsurance
21 Jan 2025

Bermuda: Chambers Insurance & Reinsurance Guide 2025

This guide provides the latest information on sources of insurance and reinsurance law, overseas-bas...

Technology and Innovation
20 Jan 2025

Bermuda: Insurance industry is going through a ‘profound’ tech transformation

One of the most pressing demands on insurers, and their leadership, is coping with the accelerating ...

Technology and Innovation
17 Jan 2025

Augmented Advocacy Series (Bermuda): AI and Legal Privilege

The dramatic rise in the use of artificial intelligence in the legal sector raises issues around leg...

Website-Code-Bermuda
13 Dec 2024

Gifting a home in Bermuda: a review of your options

A home can be gifted to a spouse, or the next generation either during an owner’s life, or as an i...