The catastrophe bond market made a robust start to the year, with issuance totalling $US2.17 billion ($2.89 billion) in the first quarter, Aon’s latest insurance-linked securities update says.

The total is just short of the record $US2.21 billion ($2.94 billion) set in the first quarter of last year.

The market expanded slightly as new bonds outpaced maturities, totalling $US2 billion ($2.66 billion).

Aon Securities, the insurance investment banking division of Aon Benfield, expects issuance for the year will reach $US8 billion ($10.7 billion).

A further $US4.2 billion ($5.6 billion) is set to mature in the second quarter, with investor capacity poised to replace the capital amid strong demand for new issuance.

Aon insurance-linked securities indices offered mixed results relative to other financial benchmarks in the quarter, but outperformed the 3-5-year US treasury notes index and 3-5-year fixed-rate commercial mortgage-backed securities.

Seven catastrophe bond transactions were completed in the three-month period, with issuance dominated by returning sponsors.