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ILS, cat bond activity decrease, but forecasts promising: Aon

cat bond

The $8 billion in insurance-linked securities issued in the first half of 2022 was off $500 million from last year’s record-setting first half, but the sector shows a “robust” pipeline going forward, according to a report Tuesday from Aon PLC.

Similarly, for the year ended June 30, 2022, the $12 billion of property/casualty catastrophe bonds issued was off $700 million from the previous 12-month period ended June 30, 2021, the report said.

The average transaction size for first-half 2022 was $234 million over 34 issuances compared with the average deal size of $283 million in first-half 2021.

Bermuda remains by far the largest issuer domicile for the 12 months ended June 30, 2022, with 41 issuances, up from 38 in the 12 months ended June 30, 2021. Singapore accounted for five, down from seven; the Cayman Islands was steady at three and Ireland at two.

The period also saw Hong Kong issue its first catastrophe bond, spurring optimism for increased activity there. “With sponsors starting to utilize the regime … growth prospects for the region and the Asian market more broadly look to be positive for the year ahead,” the report said.

Forecasts remain optimistic.

“The ILS market has continued to be supported by new and repeat sponsors, and has provided access to capital even when faced with wider headwinds such as the conflict in Ukraine, inflationary pressures and rising interest rates,” Paul Schultz, chief executive officer of Aon Securities, said in a statement with the report. “We expect this momentum to continue through to the end of the year.”