Q1 Insurance-linked Securities at Record $1.49 Billion: Aon Benfield Study

April 23, 2012

Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, has issued its latest report on the insurance-linked securities (ILS) market, which reviews the key trends witnessed during the first quarter of 2012.

The”Insurance-Linked Securities First Quarter Update 2012” reveals that catastrophe bond issuance for the period reached a record $1.49 billion as investors deployed additional capital into the sector.

Retaining strong momentum from Q4 2011, a total of nine transactions closed during Q1 2012, featuring both new and repeat sponsors. An additional three catastrophe bonds totaling $495 million priced in the quarter but did not close until Q2 2012.

Aon Benfield’s ILS Indices posted negative returns for the quarter principally reflecting spread widening, with the All Bond and BB Rated Bond Indices decreasing by 0.06 percent and 0.14 percent respectively – an improvement over Q1 2011 returns, which were negatively affected by mark-to-market losses from the Tohoku earthquake in Japan. Meanwhile, the U.S. Hurricane Bond and U.S. Earthquake Bond Indices decreased by 0.32 percent and 0.17 percent respectively during the period. For the trailing twelve months, all indices posted gains.

Paul Schultz, CEO of Aon Benfield Securities, commented: “We are very pleased with the record volumes of ILS activity we saw in the market during the first quarter of 2012, which highlights the importance of ILS as both a risk transfer vehicle and an investment product. We believe that the market fundamentals are conducive to further growth in this sector and very pleased that issuance in the first quarter of 2012 came from both new and repeat sponsors.”

Aon Benfield Securities forecasted that for full year 2012 ILS issuance will be in the range of $5 to $6 billion.”

Source: Aon Benfield Securities

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