Insurance-linked securities hit new high

Record second-quarter property/casualty issuance of insurance-linked securities combined with a strong first quarter to propel the market to a new yearly high in 2017, according to a new report released Friday by Aon Benfield Securities.

Second-quarter issuance of $6.38 billion of limit across 20 transactions added to the $2.17 billion of first-quarter issuance to reach $8.55 billion, passing 2007’s $8.38 billion, according to Aon Benfield’s “Insurance Linked Securities: Q2 2017 Update.”

This year’s record second quarter was $1.89 billion higher than the previous record second quarter of $4.49 billion, set in the second quarter of 2014. The $2.17 billion of catastrophe bond limit placed in the first quarter of 2017 was second to the $2.22 billion placed in the first quarter of 2016.

Outstanding catastrophe bond limit reached of $26.12 billion as was also a record high for the market, the report said.

Much of the record issuance came from returning/repeat sponsors, including the third-largest catastrophe bind ever, the $1.25 billion Kilimanjaro II Re from Everest Re Group Ltd. The Series 2017-1 notes provide annual aggregate protection against U.S., Puerto Rico and Canada weighted industry insured losses for a four-year term, while the Series 2017-2 give the same cover for a five-year term. Covered perils are named storm events and earthquake events, the report said.

Six public entities came to market, according to the report, including two repeat sponsors: Citizens Property Insurance Corp. of Florida, with its $300 million Everglades Re covering Florida hurricanes; and The New York Metroploitan Transit Authority, with its $1.25 million MetroCat bond covering storm surge when caused by New York hurricanes and earthquakes. A previous issue of Everglade Re was the largest-ever catastrophe bond at $1.5 billion. This is the fifth issue for Florida Citizens, the report said.

“During the second quarter we saw a large amount of maturing limit being renewed, which contributed to the record-breaking issuance figures. However, there was still a significant expansion in the overall market, as a result of new sponsors, favorable pricing, and the ability of alternative capital to provide high levels of market capacity,” Paul Schultz, CEO of Aon Securities, said in the statement.

source http://www.businessinsurance.com/article/20170804/NEWS06/912314984/Insurance-linked-securities-hit-new-high-in-2017-Aon-Benfield-Securities

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