The catastrophe bond sector has surpassed US$100 billion in cumulative issuance since its inception more than 20 years ago, according to Aon Securities.
The sector, which began with the placement of a US$45 million all-peril catastrophe bond in 1996, has since seen a gradual increase in the use of insurance-linked securities (ILS) by the (re)insurance market, with frequent new records being set in terms of annual issuance volumes.
In 2009, alternative capital stood at US$22 billion, and during the past decade its average rate of growth has far exceeded that of traditional reinsurance capital as it has become more mainstream.
Since 2016, alternative capital has remained at or near record highs, with around US$93 billion in the reinsurance marketplace of an estimated US$610 billion total reinsurance capital; alternative capital tends to predominantly be focused on property catastrophe risk.
Over the past decade, ILS has provided a robust non-correlating asset class for investors, producing an average annual return of 6.38%, and 7.48% for 2019.
Paul Schultz, chief executive of Aon Securities, said: “From its beginnings in 1996, the insurance-linked securities sector has shown remarkable growth, reaching a point today where it is an integral component of the way in which (re)insurers approach risk transfer.”
Schultz added: “Having endured significant tests in recent times, the sector has shown strength in adversity, proving that (re)insurers and investors view ILS as being an enduring and important part of the industry.”

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