Catastrophe bond coverage reached a record $23.5 billion on 30 June, according to Aon’s insurance-linked securities (ILS) report.
In the report, which analysed the key trends in the 12 months up to 30 June 2015, revealed that annual catastrophe bond issuance reached $7 billion, a decrease on the record breaking prior year of $9.4 billion.
Twenty-five transactions, including two life and health transactions, closed during the period, while $5.9 billion of bonds matured, according to the report.
The 12 months under review saw two other records in the ILS market with a Q1 issuance of $1.7 billion across eight transactions and a record average transaction size of $279 million for any 12-month period ending 30 June.
According to the report, US exposures continued to dominate the catastrophe bond market, with 22 of the 25 transactions comprising US risk in some capacity.
Outside of the US, dedicated Japan risk was covered in two transactions and standalone Europe risk in one transaction.
The report also found that during the 12 months, eight quota share sidecar transactions closed, totalling $955 million for the seven sidecars that disclosed their sizes, and the industry loss warranty market increased from $3.5 billion to an estimated $4 billion.
Paul Schultz, CEO of Aon Securities, commented: “The decrease in catastrophe bond issuance during the 12 months was in part due to the reaction of the traditional and collateralised reinsurance players to the heightened competition from the catastrophe bond market.”
“This reduction was offset by a sizeable increase in collateralized reinsurance participation. We forecast $6 billion to $7 billion in ILS issuance during calendar year 2015, and expect current pricing trends to continue into 2016 in the absence of substantial catastrophic events that disrupt the supply of capital.”
