ILS market sees gains on average returns during 2010 Q1

Returns on insurance-linked securities (ILS) averaged 3.4% for 2010 Q1, marking an improvement over the 0.95% returns reported in 2009 Q1, said Aon Benfield.
In its report, Insurance-Linked Securities: First Quarter Update 2010, Aon noted that for the 12 months ended March 31, 2010, investor returns surpassed 13% — significantly greater than the 2.6% seen in the 12-month period to Mar. 31, 2009.
“With issuance low in the first quarter, investors looked to the secondary market to grow their portfolios and manage inflows,” said Paul Schultz, president of Aon Benfield Securities.
“This demand for bonds continued to push prices to levels unseen in previous years. Towards the end of the quarter, investors gained an optimistic view of the forward calendar, and the tide shifted to a more balanced market with investors looking to rebalance portfolios and release capital for new deals.”
Two ILS sectors, North American wind and North American earthquake, both saw considerable gains in returns year-over-year.
For the 12 months ended Mar. 31, 2010, North American wind cat bonds saw average returns of 14.47%, up from 0.30% the same period of the year prior.
And North American earthquake bonds saw average returns of 10.08% for the 12-months ended Mar. 31, 2010 — an increase from the average returns of 1.74% in the 12-months ended Mar. 31, 2009.