Catastrophe Bond Issuance Breaks New Q1 Record: Aon Benfield Report

April 16, 2015

Catastrophe bond issuance for the first quarter reached a record $1.7 billion – higher than any other first quarter issuance in the history of the insurance linked securities sector (ILS), according to a report published by Aon Benfield Securities, the investment banking division of Aon Benfield.

The report, entitled “Insurance-Linked Securities First Quarter 2015 Update,” analyses the key ILS trends witnessed in the first quarter of 2015.

The quarter comprised seven property catastrophe bonds and one health transaction and brought, as of March 31, 2015, total catastrophe bonds on-risk to $22.1 billion, a slight decrease on the record $24.3 billion seen at year-end 2014, as $3.9 billion of bonds came off-risk during the first quarter period, Aon said.

“Several records were set in the ILS market during 2014, and 2015 has continued in the same vein, with a record first quarter issuance total, and a consistently high level of transactions on-risk,” said Paul Schultz, chief executive officer of Aon Benfield Securities.

“There remains strong interest in the market from sponsors, and from investors who, despite having accepted decreased interest spreads, continue to allocate high volumes of capital to primary issuances,” he noted. “The ongoing success of the sector is partly being driven by the structuring of innovative transactions, for which we continue to see new perils, territories, and structural features being added to address individual risk requirements.”

The first quarter study reveals that in the three months to March 31, 2015, the Aon Benfield BB-rated Bond Index and the U.S. Earthquake Bond Index both posted positive returns of 0.42 percent and 0.69 percent respectively.

The Aon Benfield All Bond and U.S. Hurricane Bond indices were negative for the quarter, with losses of -0.26 percent and -0.55 percent respectively. The Aon Benfield ILS Indices are calculated by Bloomberg using month-end price data provided by Aon Benfield Securities

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Catastrophe Bond Issuance Reaches Record Levels: Aon Benfield Report

Source: Aon Benfield Securities

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