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Insurance-Linked Securities Set Issuance Record Amid New Highs In Collateralized Reinsurance Capital

Aon Benfield Securities, the investment banking division of global reinsurance intermediary and capital advisor Aon Benfield, today announces that a new record for annual insurance-linked securities issuance has been set with the pricing of the latest offering from Nakama Re Ltd.

When Nakama Re Ltd. Series 2014-2 priced on December 12, the total property catastrophe bond issuance for 2014 stood at USD8.03bn. It is worth noting that this figure excludes almost USD500mn in new issuance through private ILS structures. The previous record for annual property catastrophe bond issuance was set in 2007 when USD7.86bn of property catastrophe bonds were brought to market. In a year where Aon Benfield Securities launched its innovative CATstreamSM platform – which allows catastrophe bonds to be brought to market in less than half the time of traditional ILS solutions – there has been notable development in the ILS space.

Aside from the record annual issuance, 2014 has witnessed several further records being established in the ILS sector, including a record second quarter issuance total of USD4.5bn across 12 catastrophe bond transactions, a record first half issuance total of USD5.9bn, and a record value of catastrophe bonds on-risk –which stood at USD22.7bn as of November 30, 2014. The year also saw a new record established across other forms of collateralized reinsurance capital. As of June 30, 2014, collateralized reinsurance capacity excluding catastrophe bonds had reached a record USD36.2bn, compared to USD29.4bn in 2013 and just USD7.7bn 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 characterized 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.”

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