Innovation drives record Q1 ILS issuance

Catastrophe bond issuance for the first quarter of 2015 reached a record $1.7 billion, driven by the structuring of innovative transactions.

This is according to Aon Benfield’s latest report on the insurance-linked securities (ILS) sector, which explained that issuance in the first quarter of 2015 was higher than any other first quarter issuance in the history of the ILS sector.

The quarter comprised seven property catastrophe bonds and one health transaction and brought, as of March 31, 2015, total catastrophe bonds on-risk to $22.1 billion. This is a slight decrease on the record $24.3 billion seen at the end of 2014, as $3.9 billion of bonds came off-risk during the first quarter period.

Paul Schultz, chief executive officer of Aon Benfield Securities, said: “Several records were set in the ILS market during 2014, and 2015 has continued in the same vein, with a record first quarter issuance total, and a consistently high level of transactions on-risk.

“There remains strong interest in the market from sponsors, and from investors who, despite having accepted decreased interest spreads, continue to allocate high volumes of capital to primary issuances. The ongoing success of the sector is partly being driven by the structuring of innovative transactions, for which we continue to see new perils, territories, and structural features being added to address individual risk requirements.”