Global catastrophe bond issuance broke a first-quarter record, come in at nearly $3.6 billion for Q1 2018 as the market expanded into new areas, Aon Securities said in its latest report.
The $3.58 billion in insurance linked securities were spread between 10 transactions. What’s more, the ILS tally was well above the $2.2 billion raised in the 2016 and 2017 first quarters, Aon Securities said.
Paul Schultz, Aon Securities CEO, said that the Q1 catastrophe bond issuance record “sets a positive tone” for the rest of 2018.
“Following the potential losses that could have been incurred from the series of 2017 natural disaster events, investors in this sector could easily have taken a ‘wait-and-see’ approach,” Schultz said in prepared remarks. “However, given the record levels of issuance seen during the first three months of the year, it is clear they are aware of the inherent value of ILS and are comfortable with the associated risks.”
Aon Securities predicts $9 billion in catastrophe bond issuance for all of 2018.
Here are some highlights from the quarter, taken from the full report “Insurance-Linked Securities Q1 2018 Update”:
The market expanded into new areas in terms of geography and perils covered. Examples include a multi-country catastrophe bond launched in February on behalf of the World Bank, providing coverage for Latin America through the International Bank for Reconstruction and Development CAR program issuances. There was also the Sanders Re catastrophe bond issued on behalf of Allstate, which included traditional reinsurance placement but also coverage both on a per-occurrence and annual aggregate basis, in two separate sections of a single class of notes.
Repeat sponsors led in terms of issuance volume, sponsoring $2.28 billion of property catastrophe bonds.
Maturing property catastrophe bonds during the period totaled $1.37 billion. Aon Securities said they were easily replaced but also significantly expanded, bring the market to $29 billion of catastrophe bonds on-risk as of March 31 – a new high. Out of that total. $27.3 billion were property transactions.
Source: Aon Securities