Catastrophic bond issuance reached a huge $12.5bn in 2021, according to insurance and reinsurance broker Aon.
This, said the broker, beats the previous record of $11bn, which was set in 2020.
Paul Schultz, CEO of Aon Securities, said in a statement: “In addition to growth in scale, catastrophe bonds have evolved to cover a vast array of perils, geographies, triggers and sponsors through some of the most innovative risk transfer structures, and have demonstrated their ability to provide protection for property, casualty, life and health risks.”
He added: “As a testament to its commitment to nurturing and growing the market and ensuring the most efficient capital solutions are available to insurance, reinsurance, corporate and government entities, Aon Securities is proud to have brought new sources of capital to match risks, while continuing to increase its market-leading issuance representation.”
Last year, Aon reported that total cat bond issuance had surpassed $100bn for the first time since its launch in 1996. Back then, Aon said that alternative capital stood at just $22 billion in 2009, meaning its growth rate over the past decade has far exceeded that of traditional reinsurance capital. Today, Aon says that there are more than $32bn worth of bonds active in the market.
Richard Pennay, CEO of insurance-linked securities for Aon Securities, also weighed in with a comment.
He said: “The expansion of sponsors, the development of structures and the innovation of the sector provides tremendous confidence in the ability for the capital markets to continue to meet the evolving risk management needs of tomorrow, while also helping to address the needs of the underserved.”
Aon’s 2021 issuance total is in line with that of our sister site Artemis, which recorded more than $12.5 billion of property cat bond issuance during the year.
In fact, the Artemis Q4 2021 Catastrophe Bond and ILS market report examines some $14 billion of issuance in the year, which includes property cat bonds, deals covering non-catastrophe risks, as well as private cat bond transactions.
