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2020 catastrophe bond issuance already up 20%

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Global catastrophe bond issuance has surged after contracting last year, a new update on insurance linked securities (ILS) activity from Aon finds.

A total of $US2.8 billion ($3.88 billion) of property catastrophe bond placed in the second quarter brought the total issued for the year to date to $US6.5 billion ($9.01 billion).

That is already up by a fifth on the $US5.4 billion ($7.48 billion) placed for the whole of last year, when costly storms and the California wildfires triggered concern over pricing.

“We believe that the busy pipeline will continue over the next two quarters given the expected maturities,” Aon says.

“This quarter’s steady flow of new issuances, despite a brief interruption due to the volatility from COVID-19, was a great reminder of the resilience of this market.”

Aon says investors have requested that exclusionary wording around pandemics and more specific definitions, especially around the term “other perils,” be included on future transactions to minimise potential uncertainties.