ILS issuance reaches new record high
Insurance-linked securities (ILS) issuance has reached a new annual record, according to Aon Benfield Securities.
Insurer Zenkyoren’s second Nakama Re catastrophe bond tipped the figures into new territory when it priced on December 12.
Prior to that, the total property-catastrophe bond issuance for 2014 stood at $8.03 billion, which does not include $500 million in new issuance through private ILS structures. The previous record for annual property-catastrophe bond issuance was set in 2007 when $7.86 billion of property-catastrophe bonds were brought to market.
Aside from the record annual issuance, several further records will be established in the ILS sector in 2014, including a record second quarter issuance total of $4.5 billion across 12 catastrophe bond transactions, a record first half issuance total of $5.9 billion, and a record value of catastrophe bonds on-risk – which stood at $22.7 billion as of November 30, 2014.
The year also saw a new record established across other forms of collateralised reinsurance capital. As of June 30, 2014, collateralised reinsurance capacity excluding catastrophe bonds had reached a record $36.2 billion, compared to $29.4 billion in 2013 and just $7.7 billion in 2009.
Paul Schultz, chief executive officer of Aon Benfield Securities, said: “The inflows of alterative capital into the reinsurance industry over the past two years have been well reported, and in 2014 we have seen the results of this influx in terms of the volume of ILS transactions that have been completed.
“This year, however, has been characterised by more than just largesse, as we have taken positive steps to expand the scope of the ILS offering by structuring innovative deals to address new perils, new territories, and new currencies, as well as making ILS solutions more accessible to smaller firms and those companies wanting to structure smaller transactions.
“Our outlook for the ILS sector for 2015 remains highly positive, and we anticipate that the capital inflows and strong pipeline of opportunities seen in 2014 to continue.”
