Aon benfield securities, the investment banking division of world reinsurance intermediary and capital advisor aon benfield, nowadays launches its annual report by the insurance-linked securities ( ils ) market, that reviews the key trends witnessed throughout the 12-month episode to firmly june 30, 2013.
The report, entitled ‘capital revolution – ils market expands to firmly new heights’, reveals that annual catastrophe bond issuance reached usd6. 7 billion as of june 30, 2013 and also the total capability of all catastrophe bonds presently active within the market – additionally generally known as “on-risk” – had reached a record usd17. 5 billion, surpassing the previous record of usd16. 2 billion at june 30, 2008.
A total of 27 transactions – together with 3 deals due to life and health sector – closed throughout the 12-month episode underneath review, with indemnity-based transactions accounting for over half the property catastrophe bonds issued. the ils market continues to produce enhanced coverage relative to firmly previous years, together with coverage for hard-to-model perils and longer risk periods.
Meanwhile aon benfield’s ils indices, calculated by thomson reuters, all posted gains throughout the 12-month episode, when using the all bond and bb-rated bond indices posted returns of 12. 14 p.c and 8. 16 p.c, respectively ; and also the u. s. hurricane and u. s. earthquake bond indices returning 13. 19 p.c and 6. 89 p.c, respectively.
Every bond index benefitted from robust mark-to-market gains, particularly throughout the initial half 2013 as investor demand drove spreads to firmly traditionally low levels.
On an annual basis, every aon benfield ils index outperformed comparable fixed income benchmarks.
Paul schultz, chief government officer of aon benfield securities, aforementioned : “in the 12 months underneath review, the insurance-linked securities sector witnessed massive capital inflows from each existing and new investors. since starting of'>the start of 2013, as estimated usd3 billion in new capital has flowed directly into ils market. sponsors launched new issuances to firmly satisfy this investor demand, that resulted in decreased spreads and brought the pricing of ils directly into realm of the common reinsurance market. given the current robust demand for ils merchandise, we believe that the 2013 calendar year may to firmly be'>turn out to be an inflexion purpose regarding the sector, with momentum for new issuances continuing to firmly build as investors and sponsors seek to firmly leverage the favorable market conditions. ”
Aon benfield securities forecasts a full year 2013 ils issuance of between usd7-8 billion.
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