A massive $8.8 billion in catastrophe bonds and insurance linked securities (ILS) made last year the market’s busiest on record.

And — at the end of the year — the outstanding sum in the sector was more than $25 billion.

The news came in the review of the last quarter of 2014 by financial website Artemis.

But the site said that the fourth quarter was only the second busiest on record, with more than $2.16 billion of new risk capital issues.

Artemis said: “The fourth quarter is often a busy one and 2014 has been no different as a number of large cat bonds came to market in advance of the January reinsurance renewal season.”

The site added: “The quarter four deals brought some welcome diversification to investors, as well as the return of a number of repeat and valued cat bond sponsors showing their commitment to the market.”

The report said that ILS and bond issues peaked in May, which “far outstripped” any other single month in the market’s history.

Artemis added: “Three months during 2014 managed over $1 billion of issuance, with December the second highest, helping to take the year to its record level of issuance.”

The report said that 2014 was also significant for the low rate of claims during the US wind season, which led to one of the slowest third quarters on record.

And it added: “As the reinsurance market continues to adapt to ILS, we hope to see issuance grow, even in the slower months of the year as sponsors seek to leverage lower-cost ILS capital across the seasons.”

The report predicted: “Having managed to reach the $8 billion milestone that we expected to see, our thoughts turn to 2015 and whether the ILS and catastrophe bond market can soak up the $4 billion plus of maturities that are expected in the first half of the year.

“With market participants expecting a strong deal pipeline in 2015, and investor interest remaining strong, we hope to see the ILS market surpass this year’s total in 2015.”

The report added that more cat bond transactions in the fourth quarter were priced at the guidance midpoint or slightly above than were listed below.

It said: “This is the first quarter where there was evidence of significant stability in terms of pricing, with just four of the ten tranches of notes pricing below the middle of initial coupon guidance.

“Once again, this shows that the market is aware that a pricing floor is increasingly being reached.”

The report added that the bulk of issues in the sector were relatively low risk, with the highest risk transaction of the quarter predicting an expected loss of more than five per cent and the lowest sitting at 0.58 per cent.

And it said that earthquake risk affected all the issues in the fourth quarter.

The report added: “That is very unusual but reflects the continued liking for multi-peril deals among cat bond sponsors.”