The global insurance-linked securities market shrank by more than $1 billion in the second quarter, as new issuance slowed.

That is according to a report by insurance blog website Artemis.bm, which found that new issuance of catastrophe bonds and ILS failed to meet investor demand.

Bermuda has emerged as a world leader in this area of the insurance industry and about two-thirds of the $25 billion market has been issued through vehicles based on the island.

The second quarter is traditionally a busy one for ILS, buoyed by insurers seeking extra capacity for the upcoming North Atlantic hurricane season.

However, the Artemis report counted $1.624 billion of new risk capital issued in the April-through-June period, the first time since 2011 that this period had failed to top $2 billion, resulting in one of the quietest second quarters of the last decade.

“Despite a contraction in market size, the record-breaking levels of issuance seen in the first quarter and a steady, albeit moderated issuance stream in the second quarter of 2016, helped the catastrophe bond and ILS market end Q2 with an outstanding market size of $25.174 billion,” the report stated.

“The Artemis Deal Directory shows that this total is actually $627 million larger than at the end of Q2, 2015.”

Two of the three largest issuances all went through Bermuda-domiciled special purpose insurers, Artemis found. Bellemeade Re II Ltd’s $298.6 million issue was sponsored by American International Group’s United Guaranty to cover mortgage insurance risks.

Operational Re Ltd’s $222 million issuance, sponsored by Zurich Insurance, will cover operational risks — the first time that an ILS deal has covered this exposure, according to Artemis.

In total, there were 14 transactions in the quarter.