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Catastrophe bond deals set quarterly record


The insurance-linked securities market set a record in the first quarter of this year when more than $2 billion in catastrophe bond deals were completed, units of Willis Towers Watson P.L.C. and Aon P.L.C. said Wednesday.

In separate analyses, Aon Benfield’s Aon Securities Inc. said 10 deals valued at $2.22 billion were made in the first quarter, 31% higher than the previous record set in the first quarter of 2015. Willis Capital Markets & Advisory said nine deals that were made totaled $2 billion, a 35% jump over the same quarter last year.

The brokers also said outstanding cat bonds set a record in the first quarter — at $25 billion, according to Aon Securities; and $23.2 billion, according to Willis Capital Markets.

Willis’ investment banking division said that other than Akibare Re and Aozora Re covering Japanese wind risks, the first quarter was dominated by deals for U.S. named storms and earthquakes.

In addition, Aon Securities said, first-quarter risks covered by cat bonds included U.S. wildfire, volcanic eruption and meteorite risks.

Winter storm, wildfire, volcanic eruption and meteorite risk ILS deals are “typically viewed as add-ons to multiperil coverage,” but now they are are “gaining prevalence in ILS transactions,” Aon Securities said in the analysis.

Since cat bond deals typically are concentrated in the second and fourth quarters, “the strong start to 2016 bodes well for the year ahead,” Aon Securities CEO Paul Schultz said in the analysis.

But Bill Dubinsky, head of insurance-linked Securities at Willis Capital Markets, said in a statement that “it is too early to say whether the strong (first-quarter) issuance will translate to a record-breaking year.”

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