Insurance-linked securities post stellar year of performance, according to Aon Benfield annual ILS study

Sep 05, 2012, 18:47 ET from Aon Benfield

CHICAGO, Sept. 5, 2012 /PRNewswire/ -- Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, today launches its annual report on the insurance-linked securities (ILS) market, which reviews the key trends witnessed during the 12 month period to June 30, 2012.


The report, entitled Evolving Strength 2012, reveals that catastrophe bond issuance for the period reached USD6.43 billion – an increase of more than USD2 billion over the same period in 2011, and second only to the USD8.15bn issuance seen in 2007.

Highlights from the 12 months under review included a record Q1 issuance of USD1.49 billion, eclipsing the previous record set in Q1 2011 of USD1.02 billion.

A total of 30 transactions – including two deals from the life and health sector – closed during the period, compared with 24 transactions during the prior year period, with U.S. hurricane risk continuing to dominate the market, accounting for more than 50 percent of natural catastrophe issuance.

The proportion of catastrophe bonds covering U.S. earthquake risk increased slightly from 17 percent for the year ending June 30, 2011, to 20 percent for the same period in 2012. By comparison, Europe windstorm transactions decreased slightly from 21 percent to 17 percent in the same timeframe. Meanwhile, life and health issuance activity contributed USD330 million of issuance.

At June 30, 2012, total bonds on risk stood at USD14.92 billion, an increase of USD3.4 billion from June 30, 2011.

Meanwhile, Aon Benfield's ILS Indices posted positive returns during the 12 month period, with the All Bond and BB Rated Bond Indices reaching 7.4 percent and 7.86 percent respectively, compared to 2011 returns of 6.43 percent and 4.72 percent, while U.S Hurricane Bond and U.S. Earthquake Bond Indices posted returns of 7.60 percent and 4.38 percent respectively, for the period ending June 30, 2012.

Paul Schultz, Chief Executive Officer of Aon Benfield Securities, said: "In the 12 month period under review, the insurance-linked securities sector clearly demonstrated its resilience following the global financial crisis, reaching its highest levels for both new issuance and outstanding volumes in four years. This strong performance is set to continue through the second half of 2012 and beyond, as conditions are appropriate for both sponsors and investors to utilize ILS as an effective risk transfer mechanism and as an asset class that yields healthy returns when compared to benchmark securities. We consider the ILS sector to be continually evolving, becoming ever more diversified and adaptable to clients' needs."

To view the full Insurance-Linked Securities Evolving Strength 2012 report, please follow the link below:

About Aon Benfield Securities
Aon Benfield Securities, Inc. and Aon Benfield Securities Limited (collectively, "Aon Benfield Securities") provide insurance and reinsurance clients with a full suite of insurance-linked securities products, including catastrophe bonds, contingent capital, collateralized reinsurance, industry loss warranties, sidecars and derivative products. As a recognized leader in this investment banking market, Aon Benfield Securities is helping to redefine capital by offering underwriting and placement of new issues, financial advisory services, as well as securities trading in the secondary market. Aon Benfield Securities' integration with Aon Benfield Inc's reinsurance operation expands its capability to provide analytics, modeling, rating agency, and other consultative services.  Aon Benfield Inc., Aon Benfield Securities, Inc. and Aon Benfield Securities Limited are all wholly-owned subsidiaries of Aon plc.  Securities advice, products and services are offered solely though Aon Benfield Securities, Inc. and/or Aon Benfield Securities Limited.

About Aon Benfield
Aon Benfield, a division of Aon plc, is the world's leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world's markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals' expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit

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