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Catastrophe bond issuance dropped 44.3% to $5.42 billion for the year ended June 30, compared with a year ago, according to a report Thursday from Aon Securities.
ILS capital in place declined to $93 billion at June 30 from $98 billion a year ago, the report said.
Natural catastrophes in 2017 and 2018 affected the ILS market more than in past years, Aon said.
Before 2017, “only seven cat bond classes of notes had been impaired by the natural catastrophes they were designed to cover, totaling just over $900 million,” Aon said.
“Following the hurricanes, earthquakes, wildfires, typhoons and winter storm events of 2017, 2018 and 2019, the market has endured anticipated impairments of 25 notes, leading to anticipated bond losses totaling $1.25 billion,” according to Aon Securities.
The “concentrated level of loss…has had a dramatic impact on the market dynamics of capacity, collateral treatment, pricing, and investor sentiment,” Aon said, adding the pace of loss had brought “some signs of fatigue” to the market.
For the first half of 2019, insured losses have been preliminarily estimated at $20 billion, 45% lower than the 10-year average of $36 billion, Aon said.
Insured losses from natural disasters in 2018 totaled $90 billion, the fourth-costliest year on record for public and private insurance entities, based on actual insured totals trended to today’s dollars, trailing only 2017 ($147 billion), 2011 ($148 billion) and 2005 ($135 billion), Aon Securities said.
Issuances of catastrophe bonds and insurance-linked securities worldwide reached $3.6 billion in the second quarter driven by repeat sponsors and perils, Artemis.bm reports. All four ILS deals issued in the quarter came from repeat sponsors. Returning sponsors also brought the majority of catastrophe reinsurance risk to the market in the period, with Bermudian Hamilton Re being the only new sponsor