Catastrophe bond issuance came in at a healthy clip during the 2015 second quarter, but the half-year total dipped considerably from the same, record-breaking period in 2014, Aon Benfield found in its latest market report.
Among the highlights: American International Group and United Services Automobile Association secured coverage including most of the U.S. Atlantic Coast. They also remain top five sponsors of catastrophe bonds, based on current outstanding notional volume, Aon Benfield said.
Specifically, Aon Benfield tracked $2.96 billion in catastrophe bond issuance in 10 transactions during Q2 – nine in the property/casualty realm and one for life insurance. That follows $1.7 billion in cat bonds secured in the 2015 first quarter – the most of any Q1 yet recorded. The 2015 Q2 results dipped considerably, however, from the nearly $4.5 billion in cat bond issuance tracked during the 2014 second quarter.
Consider also that the $4.66 billion in catastrophe bond issuance for the first half of 2015 represents a 21 percent drop compared to the same period in 2014, which was a record year for cat bonds.
According to the report, outstanding catastrophe bonds jumped 6 percent over Q1, reflecting an ongoing rebuild from the peak hit at the end of 2014. As of June 30, total catastrophe bonds on risk were at $23.47 billion.
Aon Benfield highlighted a number of other Q2 cat bond findings:
- Eight sponsors returned to the market in the second quarter to issue catastrophe bonds including U.S. hurricane peril, ahead of the 2015 Atlantic hurricane season. Of that number, six transactions addressed regional coverage across states including Florida, Louisiana, Texas, and Massachusetts.
- A new entrant to the market – UnipolSai Assicurazioni (UnipolSai) provided dedicated coverage for Europe earthquake. It’s also the first to do this with an indemnity trigger.
- About $3.87 billion of catastrophe bonds matured at the end of the 2015 first quarter.
Paul Schultz, CEO of Aon Securities, said in prepared remarks that the 2015 second quarter results “were highly encouraging and maintained much of the momentum created during the first quarter of the year,” if not the record-breaking pace set during the same period in 2014.
Source: Aon Benfield