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20 April 2017 Alternative Risk Transfer

Aon Securities claims ILS market stronger than expected

Schultz said that so far for 2017, as of April 13th, Aon Securities had seen levels of catastrophe bond issuance in the market of around $3.7 billion, a rise of 46% on the same period of last year.

“We said at the beginning of the year that 2017 could see total issuance of around $8 billion,” said Schultz. “However, we now think that that forecast could be on the low side.

“At present, if things continue as they have been, it is quite likely that the final total will be higher than that initial estimate, and while it remains unknown as to how much higher. We are more and more confident that we will see our estimate met – and potentially exceeded.”

According to Schultz the growth in the market has been via a combination of natural renewal in the insurance cycle and new issuance, with a mixture of repeat clients coming back to the market and renewing old business as well others entering the market for the first time and bringing new bonds.

Schultz stressed that it was still early days and that the year was barely a third done, but added that the ILS market is currently efficiently priced, allowing clients to use a lot of capacity to their best advantage. As a consequence Aon Securities has identified a fairly full pipeline of both renewals and new products.

Schultz also stated that so far 2017 was shaping up to be a rather different year from 2016 in terms of levels of activity.

“Last year we saw a good first quarter, followed by a lacklustre second quarter,” he said. “So far this year the second quarter pipeline looks good, there seems to be no slowing down of business as we saw over the second quarter of last year. The ILS market is attracting a lot of interest so far and is looking good. While it’s too early to say what the second half of the year will be like. The initial indications are favourable.”

Aon Securities will be soon releasing its first quarter 2017 overview of the ILS market which will provide more detail on the current dynamics of the sector.

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