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Member, Beacon International Group, Ltd.
Catastrophe bond issuance during the year that ended June 30 totaled $6.43 billion, according to a report issued Wednesday by Aon P.L.C.’s Aon Benfield Securities unit.
That represented a 46.7% increase from the amount issued during the same period a year ago and was second only to the $8.15 billion issued in the year that ended June 30, 2007, according to “Insurance-Linked Securities Evolving Strength 2012.”
Aon Benfield said that 30 transactions — including two deals in the life and health sector — closed during the period, compared with 24 transactions during the prior-year period. Aon Benfield found that U.S. hurricane risk continued to dominate the market, accounting for more than 50% of natural catastrophe issuance.
The proportion of catastrophe bonds covering U.S. earthquake risk increased slightly to 20% from 17% during the same period a year earlier, while Europe windstorm transactions dropped to 17% from 21% during the same period a year earlier.
The report said that as of June 30 of this year, total bonds on risk stood at $14.92 billion, an increase of $3.4 billion from June 30, 2011.
“In the 12-month period under review, the insurance-linked securities sector clearly demonstrated its resilience following the global financial crisis, reaching its highest levels for both new issuance and outstanding volumes in four years,” said Paul Schultz, CEO of Aon Benfield Securities, in a statement discussing the results. “This strong performance is set to continue through the second half of 2012 and beyond, as conditions are appropriate for both sponsors and investors to utilize ILS as an effective risk transfer mechanism and as an asset class that yields healthy returns when compared to benchmark securities. We consider the ILS sector to be continually evolving, becoming ever more diversified and adaptable to clients’ needs.”