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Cat bond issuance down from 2014, but record $24.4 billion in place


Catastrophe bond issuance for 2015 totaled $6.9 billion, off from the $8.0 billion recorded in 2014, according to a new report from Aon Benfield Securities, the company said in a statement Thursday.

Despite the annual decrease in issuance, total catastrophe bonds on-risk reached $24.4 billion as of year-end 2015, a new high “as has been the trend every year since 2012,” said the report.

The third quarter saw four transactions including Panda Re Ltd., the first China-exposed catastrophe bond, which provides $50 million of earthquake coverage for China Property and Casualty Reinsurance Company.

The fourth quarter saw six transactions including Kilimanjaro Re Ltd. which provided a total of $625 million of U.S., Canada, and Puerto Rico hurricane and earthquake coverage for Everest Reinsurance Co.

“Good momentum was maintained in the ILS sector during 2015 amid an environment of increased competition with traditional insurance and reinsurance solutions. This strong level of activity ensured that at year-end, catastrophe bonds on-risk stood at an all-time high,” Paul Schultz, CEO of Aon Securities, said in the statement.

The company said in its report that its “preliminary view for 2016 primary catastrophe bond issuance is $6 billion to $7 billion.”