Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, released its annual report on the insurance-linked securities (“ILS”) market, which reviews the key trends witnessed during the 12-month period to June 30, 2013.
The report, entitled “Capital Revolution – ILS Market Expands to New Heights,” revealed that annual catastrophe bond issuance reached $6.7 billion as of June 30, 2013 and the total capacity of all catastrophe bonds currently active in the market – also known as “on-risk” – reached a record $17.5 billion, surpassing the previous record of $16.2 billion at June 30, 2008.
A total of 27 transactions – including three deals from the life and health sector – closed during the 12-month period under review, with indemnity-based transactions accounting for over half the property catastrophe bonds issued. The ILS market continues to provide enhanced coverage relative to prior years, including coverage for hard-to-model perils and longer risk periods, the company reported.
Paul Schultz, chief executive officer of Aon Benfield Securities, said: “In the 12 months under review, the insurance-linked securities sector witnessed large capital inflows from both existing and new investors. Since the beginning of 2013, as estimated $3 billion in new capital has flowed into the ILS market. Sponsors launched new issuances to satisfy this investor demand, which resulted in decreased spreads and brought the pricing of ILS into the realm of the traditional reinsurance market. Given the current strong demand for ILS products, we believe that the 2013 calendar year could prove to be an inflexion point for the sector, with momentum for new issuances continuing to build as investors and sponsors seek to leverage the favorable market conditions.”
Aon Benfield Securities forecasts a full year 2013 ILS issuance of between $7-8 billion.
Read the report here: http://bit.ly/16WhtMN.
Learn more: aonbenfield.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].