Usage of insurance linked securities the first six months of 2020 is already 20 percent higher than all of 2019, underscoring the sector’s momentum and resilience even with the coronavirus pandemic, Aon Securities said in a new report.

Aon traced a total of $2.8 billion in property cat bond limit placed in the 2020 second quarter. For the first six months of the year that number hits the $6.5 million mark. In 2019, $4.5 billion in property cat bond limit was placed for the entire year, Aon said.

Broken down, the property cat bond issuance for the first six months of 2020 encompassed 27 property/casualty transactions completed by 24 sponsors with an average deal size of $241 million, Aon noted. That compares to 23 transactions completed by 21 sponsors in 2019, according to the report.

Aon noted that the new Q2 ILS issuances were interrupted briefly due to COVID-19, but that they were steady overall for the quarter – “a great reminder of the resilience of this market.”

Other report findings:

  • At $28.4 billion, the total amount of cat bonds outstanding at the end of the 2020 second quarter is “marginally down” from last year’s levels.
  • Aon expects maturities of approximately $2 billion in ILS securities which it predicts will keep the pipeline busy over the next two quarters.
  • Most transactions priced at their mid-to-wide ends of guidance. But Aon said a slight widening of issuance spreads didn’t prevent repeat sponsors from coming back to the market.

Aon’s full report is “Insurance-Linked Securities – Q2 2020 Updated.”

Source: Aon