Cat Bonds Totaling $4.5 Billion Issued in Q2 2014: Aon Benfield ILS Study

By Charles E. Boyle | July 9, 2014

Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield in its latest report on the insurance-linked securities (ILS) sector, reveals that 12 catastrophe bonds closed during the second quarter of 2014 with a total value of $4.5 billion – “the most of any quarter in the entire history of the ILS market.”

When combined with the near-record first quarter catastrophe bond issuance of $1.4 billion, “the ILS market witnessed a record first half 2014 issuance of $5.9 billion – exceeding the prior year period by almost 50 percent (1H 2013: $4.0 billion),” the report said. “As at June 30, 2014, total catastrophe bonds outstanding remained at a record high, with $22.4 billion of bonds on-risk.”

In addition the report concludes that “market pricing conditions for ILS products remained in line with historical lows during the second quarter, as investor demand kept pace with increased supply, allowing sponsors to expand coverage at competitive rates.”

Aon Benfield Securities CEO Paul Schultz commented: “After a strong 2013, the ILS market has managed to increase its momentum through the first and second quarters of this year, with new records being set for issuance volumes and more catastrophe bonds on-risk than at any other time in the market’s history.

“We believe that there are still further opportunities for expansion, especially if the sector continues to innovate in terms of its product offerings. For instance, our recently launched CATstream facility enables our clients to access capital markets capacity in around half the time than for a traditional catastrophe bond solution.”

With strong growth continuing in this sector, Aon Benfield Securities forecasts that 2014 could be a record year for the ILS market.
To view the full Insurance-Linked Securities Second Quarter 2014 Update report go to, please follow the link below:

http://bit.ly/1pWYnD8

Source: Aon Benfield Securities

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