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Cat bond issuance at record high in Q2


July 8, 2014   by Canadian Underwriter


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Twelve catastrophe bonds totaling US$4.5 billion were issued in the second quarter of this year, the most of any quarter in the history of the insurance-linked securities market, Aon Benfield Securities reported Tuesday.

For the first half of the year, the ILS market saw issuance of US$5.9 billion, surpassing the first half of 2013, which saw US$4.0 billion in issuance, Aon said in a quarterly update report.

As of June 30, total catastrophe bonds outstanding remained at US$22.4 billion of bonds on-risk, a record-high according to Aon.

With investor demand matching increased supply, market pricing conditions for ILS products during the quarter were in line with historical lows, Aon also noted.

“After a strong 2013, the ILS market has managed to increase its momentum through the first and second quarters of this year, with new records being set for issuance volumes and more catastrophe bonds on-risk than at any other time in the market’s history,” Paul Schultz, Aon Benfield Securities’ CEO said in a statement.

“We believe that there are still further opportunities for expansion, especially if the sector continues to innovate in terms of its product offerings.”

With strong growth continuing in this sector, Aon Benfield Securities said that 2014 could be a record year for the ILS market.


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