SCOR, Chubb, Help Drive Q1 Cat Bonds Issued to Record Levels: Aon Benfield

Catastrophe bond limit secured in the 2015 first quarter came in at $1.7 billion, the most of any Q1 yet recorded, Aon Benfield said in its latest status report on insurance-linked securities.

Aon Benfield said that repeat sponsors seeking coverage in the competitive rate environment drove the number, and it found other results that indicate a cat bond highpoint.

Consider:

Total outstanding catastrophe bonds settled at $22.1 billion as of March 31, with $3.9 billion of bonds having come off-risk since the end of 2014. This trend freed up capital for investors to reallocate in the insurance linked securities market, leading to strong secondary market activity in January when it would otherwise be quite, Aon Benfield said.

Cumulative property/casualty bond issuance since the market started soared past $60 billion by the end of Q1.

Aon Benfield noted a number of Q1 cat bond highlights in its report.

SCOR, for example, came to market with a new offering from Atlas IX Capital Ltd., securing $150 million in industry index U.S. hurricane and North America earthquake coverage. This follows its U.S. mortality issuance under the same program in 2013, though Canadian earthquake risk is a new addition for the sponsor.

Chubb got $250 million of indemnity Northeast multi-peril coverage for personal and commercial lines from East Lane VI Ltd., its 9^th catastrophe bond. This is the first bond for Chubb that offers coverage for un-modeled perils of volcanic eruption and meteorite impact.

State Farm was able to raise $300 million in New Madrid earthquake indemnity coverage for the third year in a row. It now has a combined $900 million of total limit outstanding. With this in mind, State Farm placed its entire New Madrid $1 billion xs $450 million layer.

Compared to the $1.7 billion cat bond issuance for Q1, the number came in at $1.1 billion in the 2011 first quarter, nearly $1.5 billion in the 2012 first quarter, $670 million in the 2013 first quarter and $1.4 billion over the same period in 2014, Aon Benfield noted.

Source: Aon Benfield