Total property catastrophe bond issuance for 2014 stood at $8.03 billion as of Dec. 12, a new record for annual insurance-linked securities, Aon Benfield Securities said.
That new milestone hit with the Dec. 12 pricing of the latest offering from Nakama Re Ltd., Aon Benfield said. Consider that the $8.03 billion number doesn’t even include close to $500 million in new issuance that took place through private ILS structures. The previous record goes back to 2007, when $7.86 billion in property catastrophe bonds were brought to market, Aon Benfield noted.
The surge of alternative capital into reinsurance isn’t new, but the past year has seen the trend morph into many new directions, Aon Benfield Securities CEO Paul Schultz said.
“The inflows of alternative capital into the reinsurance industry over the past two years has been well reported, and in 2014 we have seen the results of this influx in terms of the volume of ILS transactions that have been completed,” Schultz noted in prepared remarks. “This year, however, 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.”
Aon Benfield noted other records in the insurance-linked securities sector for 2014, including:
- A record second-quarter issuance total of $4.5 billion across 12 catastrophe bond transactions.
- A record first-half issuance total of $5.9 billion.
- A record value of catastrophe bonds on-risk, which hit $22.7 billion as of Nov. 30, 2014.
Source: Aon Benfield Securities