New cat bond issuance in Q1 reached $670 million

New catastrophe bond issuance for the first quarter of the year reached $670 million, with another $1.2 billion of bonds in the process of being marketed, Aon Benfield Securities April 18.

Three cat bonds closed during the quarter, according to the firm, the investment banking division of the global reinsurance intermediary.

The largest was Caelus Re 2013 Ltd., which provides $270 million of capacity to sponsor Nationwide Mutual for U.S. hurricane and earthquake exposures, Aon said. All figures are in U.S. dollars.

The others included Everglades Re Ltd., which provides $250 million of Florida hurricane capacity to sponsor Citizens Property Insurance Corporation, and Vitality Re IV Limited, which issued $150 million of notes related to health risks for sponsor Aetna Life Insurance, the company said.

For the year ending March 31, investment returns for the Aon Benfield All Bond index had reached 12.69%, the company noted.

For the first quarter of 2013, all of the company’s insurance linked securities indices posted market-to-market gains, it noted, with the All Bond index rising to 3.13% (versus 0.54% in 2012), the company said.

The U.S. Hurricane Bond index rose from 0.28% in 2012 to 2.29%, while the U.S. Earthquake Bond index increased to 2.38% from 0.14% last year, the company reported.

“Capital flows into the ILS sector materially changed the tone of the market in the first quarter of 2013,” Paul Schultz, CEO of Aon Benfield Securities noted in a statement.

“Risk adjusted pricing decreases benefited clients and visibility of the catastrophe bond market has never been higher,” he added. “Momentum gained in the first quarter of 2013 has most certainly carried forward into the second quarter of 2013, both in terms of capacity and price.”

Aon Benfield Securities is also forecasting “strong ILS issuance volumes for 2013, with a solid pipeline for the first half of the year, primarily driven by U.S. risks.”

The company’s report on ILS trends for the first quarter of the year is available on its website.