Catastrophe bond market issuance set new records last year due to strong investor demand, according to Willis Towers Watson and Aon Securities.

Willis Towers Watson estimates last year’s issuance at almost $US10 billion ($12.64 billion), while Aon Securities puts the figure at $US10.7 billion ($13.53 billion).

Appetite for the asset class, also known as insurance-linked securities (ILS), is expected to remain solid this year as more investors look to participate in the risk market.

“The ILS market had a very strong 2017, with several new records being set and alternative capital rising to new heights in the reinsurance marketplace,” Aon Securities CEO Paul Schultz said. “We expect to see a gradual broadening of the scope of ILS products, making them an even more common risk transfer tool for (re)insurers, with continued support from investors for this diversifying asset class.”

Willis Towers Watson is equally upbeat and does not expect demand to wane, despite the huge catastrophe losses recorded last year.

“We see no end in sight to ILS growth as a long-term trend,” it said.

“Rather than running away from the 
losses, ILS capital is running towards both 
the short-term potential for modestly
 better risk spreads and the longer-term opportunity to partner with reinsurers, insurers and insureds to fuel asset-under-management growth and ultimately make insurance more available and affordable.”