ILS enjoys record growth

The insurance-linked securities (ILS) market attracted US $2.095 billion of capital in the second quarter of 2012, up approximately $600 million from quarter one’s record $1.493 billion, said Aon Benfield in a mid-year renewals report.

Seven catastrophe bonds successfully closed and as of June 30th 2012, there was $14.9 billion of catastrophe bonds on risk – an increase of $3.4 billion on the same period last year.

The trend of cedents favouring indemnity coverage also continued, with the Travellers Indemnity Company sponsoring their first indemnity transaction.

With lower than average global catastrophe losses in quarter one and increased premiums at January 1 renewals, reinsurance capital has returned to peak 2010 levels of $470 billion.

Further low catastrophe loss activity in quarter two is expected to result in a continued increase for the half year 2012 results. Insurer capital has also increased four percent since the end of 2011, but the report noted there a continued global excess of supply over demand.