Aon Benfield Securities Insurance-Linked Securities First Quarter Update 2013 has concluded that “for the annual period ending March 31, investment returns for the Aon Benfield All Bond index had reached 12.69 percent (2012: 5.90 percent).
The report, published by the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, reviews the key trends witnessed during the first quarter of 2013 in the insurance linked securities (ILS) market.
For the quarter under review, Aon Benfield said all of its “ILS Indices posted mark-to-market gains, with the All Bond index rising to 3.13 percent (2012: 0.54 percent), the BB-rated Bond index increasing to 2.25 percent (2012: 0.53 percent), the U.S. Hurricane Bond index increasing to 2.29 percent (2012: 0.28 percent), and the U.S. Earthquake Bond index increasing to 2.38 percent (2012: 0.14 percent).”
In addition new catastrophe bond issuance for the period reached $670 million, with a further $1.12 billion of bonds in the process of being marketed.
A total of three catastrophe bonds closed during the first quarter; the largest, Caelus Re 2013 Ltd., provides $270 million of capacity to sponsor Nationwide Mutual for U.S. hurricane and earthquake exposures.
Other catastrophe bonds that closed in Q1 comprised Everglades Re Ltd. – which provides $250 million of Florida hurricane capacity to sponsor Citizens Property Insurance Corporation – and Vitality Re IV Limited, which issued $150 million of notes related to health risks for sponsor Aetna Life Insurance.
Aon Benfield Securities CEO Paul Schultz commented: “Capital flows into the ILS sector materially changed the tone of the market in the first quarter of 2013. Risk adjusted pricing decreases benefited clients and visibility of the catastrophe bond market has never been higher. Momentum gained in the first quarter of 2013 has most certainly carried forward into the second quarter of 2013, both in terms of capacity and price.”
Aon Benfield Securities forecasts strong ILS issuance volumes for 2013, with a solid pipeline for the first half of the year, primarily driven by U.S. risks.
Source: Aon Benfield Securities
Topics Catastrophe USA Aon
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