16 July 2015ILS

Cat bond issuance in Q2 hits nearly $3bn

Nearly $3 billion of catastrophe bonds were issued in the second quarter of 2015, following the most active first quarter to date.

This is the finding of Aon Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, which launched its latest report on the insurance-linked securities (ILS) sector for the second quarter of 2015.

Nine property catastrophe bonds and one life transaction were issued in the quarter. This included the inaugural issuance from new entrant UnipolSai Assicurazioni.

The transaction, Azzurro Re I, provides dedicated coverage for Europe earthquake and is the first catastrophe bond to do so with an indemnity trigger.

When combined with the record first quarter 2015 catastrophe bond issuance total of $1.7 billion, total catastrophe bond issuance for the first half of the year stood at $4.7 billion, compared with $5.9 billion in the first half of 2014.

As at June 30, 2015, catastrophe bonds on-risk totalled $23.5 billion, a six percent increase over the end of the first quarter of 2015 when $3.9 billion of bonds matured. This was slightly lower than the record $24.3 billion seen at the end of the fourth quarter of 2014.

Paul Schultz, chief executive officer of Aon Securities, said: “Whilst not quite matching the record-breaking second quarter of 2014, results during second quarter 2015 were highly encouraging and maintained much of the momentum created during the first quarter of the year.

“It is worth noting that the second quarter saw the issuance of a large extreme mortality bond that brought total life and health catastrophe bond issuance for 2015 to the highest level since 2007.”