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$1.9 billion in catastrophe bonds closed in 2013 fourth quarter: Report


Eight catastrophe bonds closed during the fourth quarter of 2013 with a total value of $1.9 billion, according to a new report issued Monday by Aon Benfield Securities, the investment banking division of Aon Benfield Group Ltd.

The eight were part of a total of $3.5 billion in cat bonds issued across 16 transactions during the second half of 2013 and $7.5 billion for the entire calendar year, Aon Benfield Securities said in a statement.

“Insurance-Linked Securities Fourth Quarter 2013 Update” also shows that as of Dec. 31, total catastrophe bond limit outstanding had reached $20.3 billion — the highest level in ILS market history, as market pricing conditions for ILS products remained in line with the historical lows seen throughout the year and strong demand for catastrophe bonds continued among sponsors and investors, the company said in the statement.

“The fourth quarter of 2013 saw the maintaining of robust ILS issuance volumes and ever-increasing interest from both sponsors and investor,” said Paul Schultz, CEO of Aon Benfield Securities, in a statement.

He said for 2013 as a whole, ILS pricing decreased to levels that are “highly competitive with traditional reinsurance. In certain peak zone areas, we have seen catastrophe bonds become a more cost-effective risk transfer mechanism than solutions available in the traditional market.”

He added that Aon Benfield expects 2014 to see continued inflows of capital, and that the ILS sector will make further progress.