CHICAGO—The annual issuance volume of catastrophe bond transactions dropped about 6% to $4.4 billion during the year that ended June 30, compared to the same period a year earlier, according to a report on insurance-linked securities issued by Chicago-based Aon Corp.'s Aon Benfield Securities unit on Wednesday.

The report, “Consistency and Confidence,” found that 24 separate catastrophe bond transactions occurred from July 1, 2010, to June 30, 2011, up from 21 during the same period a year earlier. It also found that “sidecars experienced resurgence in 2011, further demonstrating investors' interest to continue to provide fresh capital after market losses.”

According to the report, the total bonds on risk as of June 30 were $11.5 billion, a decrease of almost $1.7 billion from the previous June 30.

“The overall decline was caused by the interruption of issuance in the second quarter of 2011, as well as large maturities of catastrophe bonds issued in 2007 and 2008,” said the report. “In all, the catastrophe bond market has seen $37.6 billion of cumulative issuance since 1996, demonstrating its importance as a strategic and efficient risk management tool.”

"Consistency in issuance, including strong participation from repeat issuers, demonstrated the continued reliance of both sponsors and investors on capital markets capacity,” said Paul Schultz, president of Aon Benfield Securities, in a statement accompanying the report.

“Renewed interest in sidecar structures also demonstrates the flexibility of the (insurance-linked securities) market to provide fresh capital following market losses,” he said. Mr. Schultz added that despite the March earthquake in Japan and updates of Newark, Calif.-based Risk Management Solutions Inc.'s U.S. hurricane and Europe windstorm models, “We anticipate a good catastrophe bond issuance pipeline in the historically active second half of the year. Additionally, we believe the fundamentals are positive for market growth in 2012 and beyond."

The report found that U.S. hurricane risk continued to dominate the catastrophe bond market in the 12 months to June 30, 2011, accounting for 46% of natural catastrophe issuance. U.S. earthquake risk and Europe windstorm risk accounted for 15% and 19% respectively.