The Insurance-Linked Securities (ILS) Second Quarter 2014 Update by Aon Benfield Securities has revealed that 12 catastrophe bonds closed during the period with a total value of $4.5 billion—the most of any quarter in the history of the ILS market.
When combined with the near-record Q1 catastrophe bond issuance of $1.4 billion, the ILS market witnessed a record issuance for the first half of 2014 of $5.9 billion, exceeding the prior year period by almost 50 percent.
As at 30 June 2014, total catastrophe bonds outstanding remained at a record high, with $22.4 billion of bonds on-risk.
Market pricing conditions for ILS products remained in line with historical lows during Q2, as investor demand kept pace with increased supply, allowing sponsors to expand coverage at competitive rates.
Paul Schultz, CEO of Aon Benfield Securities, said: “After a strong 2013, the ILS market has managed to increase its momentum through [Q1 and Q2 of 2014], with new records being set for issuance volumes and more catastrophe bonds on-risk than at any other time in the market’s history.”
“We believe that there are still further opportunities for expansion, especially if the sector continues to innovate in terms of its product offerings. “
“For instance, our recently launched CATstream facility enables our clients to access capital markets capacity in around half the time than for a traditional catastrophe bond solution.”
With strong growth continuing in this sector, Aon Benfield Securities forecasts that 2014 could be a record year for the ILS market.
The full ILS Second Quarter 2014 Update report can be found here.
