Aon Benfield Securities (ABS), the investment banking division of global reinsurance intermediary Aon Benfield, says first-quarter catastrophe bond issuance was the highest in the history of the insurance-linked securities (ILS) sector.

The quarter recorded catastrophe bond issuance of $US1.7 billion ($2.2 billion), it says. There were seven property catastrophe bonds and one health transaction.

At March 31 total catastrophe bonds on risk totalled $US22.1 billion ($28.5 billion), slightly below the record $US24.3 billion ($31.3 billion) at the end of last year.

ABS CEO Paul Schultz says several records were set in the ILS market last year, and this year has continued in the same vein, with record first-quarter issuance and a consistently high level of transactions on risk.

“There remains strong interest in the market from sponsors and from investors who, despite having accepted decreased interest spreads, continue to allocate high volumes of capital to primary issuances.

“The ongoing success of the sector is partly being driven by the structuring of innovative transactions, for which we continue to see new perils, territories and structural features being added to address individual risk requirements.”

In the three months to March 31 the Aon Benfield BB-rated Bond Index and the US Earthquake Bond Index posted positive returns of 0.42% and 0.69% respectively.

The Aon Benfield All Bond and US Hurricane Bond indices were negative for the quarter, with losses of 0.26% and 0.55% respectively.