Aon Benfield Securities, the investment banking subsidiary of Aon Corporation, today releases its latest Insurance Linked Securities (ILS) report, which examines the key trends in the ILS sector during the first quarter of the year.
The ILS First Quarter Update 2011 reveals that four catastrophe bonds with total capital of approximately USD1 billion were issued during the period, compared with the two issuances in Q1 2010 that raised a total of USD300 million in the capital markets.
The report states that, currently, several catastrophe bonds with exposure to the Japanese event may be impacted by the earthquake and related seismic activity. Generally speaking, most catastrophe bonds with exposure to Japan earthquake risk traded lower in the quarter and, consequently, mark-to-market losses on these bonds drove total returns lower for the market. These trends were evidenced by the Aon Benfield ILS All Bond Index, which posted a negative two percent return for the three months ending March 31, 2011 compared to a positive 3.4 percent return for the same period in 2010.
Looking ahead, Aon Benfield Securities forecasts that Q2 2011 ILS issuance is likely to be lower than the year ago period, but does not expect a downward trend in ILS activity. The report also highlights that around USD2.4 billion of catastrophe bonds will mature during Q2 2011.
Paul Schultz, President of Aon Benfield Securities, said: “Aon Benfield Securities continues to see strong ILS interest from both issuers and investors, despite our expectation for lower second quarter issuance than in the same period in 2010. Catastrophe bonds will continue to be an important source of risk transfer capacity for U.S. perils, and potentially more important for non-U.S. risks given recent global events.”
Source : Aon Benfield Press Release
