New catastrophe bond issuance for Q4 2012 reached $1.89 billion, and $6.25 billion for 2012 as a whole – the highest insurance-linked securities issuance volume since 2007, said Aon Benfield.
Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield revealed the good news in its latest report on the insurance-linked securities market.
A total of seven catastrophe bonds closed during the fourth quarter, including Compass Re 2012 – the largest single transaction of Q4 – which secured $400 million of US hurricane and earthquake capacity for the National Union Fire Insurance Company of Pittsburgh, an affiliate of insurer AIG.
Meanwhile, the majority of Aon Benfield’s ILS Indices posted mark-to-market gains in Q4 2012, with the All Bond index rising to 2.1 percent (2011: 1.7 percent), the BB-rated Bond index decreasing to 1.4 percent, the US Hurricane Bond index increasing to 2.2 percent, and the US Earthquake Bond index increasing to 1.6 percent (2011: 0.7 percent).
Full year results for the indices were even more impressive, particularly for the All Bond index, which increased to 9.9 percent (2011: 3.2 percent).
Paul Schultz, CEO of Aon Benfield Securities, said: “Fourth quarter 2012 ILS issuance volumes were strong adding to the consistently impressive quarterly performances for the year as a whole. The All Bond index outperformed all the major benchmarks for the fourth quarter, mainly due to coupon returns, in what was a relatively steady pricing environment.”
Aon Benfield Securities forecasts strong ILS issuance volumes throughout 2013, with a solid pipeline for the first half of the year, primarily driven by US risks.
