ILS issuance at record level amid new highs in collateralized reinsurance capital: Aon

The pricing of the latest offering from Nakama Re Ltd. has brought annual insurance-linked securities (ILS) issuance to a record level, with total property catastrophe bond issuance for 2014 reaching US$8.03 billion, notes global reinsurance intermediary and capital advisor Aon Benfield Securities.

The US$8.03 billion excludes almost US$500 million in new issuance through private ILS structures, Aon Benfield Securities, the investment banking division of Aon Benfield, reported in a statement Monday.

The figure also eclipses the previous record of US$7.86 billion in annual property catastrophe bond issuance, set in 2007.

Beyond the volume of ILS transactions that have been completed in 2014, the year “has been characterized by more than just largesse, as we have taken positive steps to expand the scope of the ILS offering by structuring innovative deals to address new perils, new territories, and new currencies, as well as making ILS solutions more accessible to smaller firms and those companies wanting to structure smaller transactions,” Paul Schultz, chief executive officer of Aon Benfield Securities, says in the statement.

“We anticipate that the capital inflows and strong pipeline of opportunities seen in 2014 to continue,” Schultz adds.

Aon Benfield cites other records in the ILS sector in 2014 include the following:

• a record 2014 Q2 issuance total of US$4.5 billion across 12 catastrophe bond transactions;
• a record first half issuance total of US$5.9 billion; and
• a record value of catastrophe bonds on-risk, which was US$22.7 billion as of November 30, 2014.

In addition, Aon Benfield reports that collateralized reinsurance capacity excluding cat bonds as of June 30, 2014 had reached a record US$36.2 billion, up from US$29.4 billion 2013 and US$7.7 billion in 2009.