Insurance linked securities (ILS) issuance could rival the record set last calendar year given the level of first-half activity and a robust pipeline, Aon says.

“The ILS market has continued to be supported by new and repeat sponsors, and has provided access to capital in a positive, orderly manner,” Aon Securities CEO Paul Schultz said.

“Even when faced with wider headwinds such as the conflict in Ukraine, inflationary pressures and rising interest rates, there was near record issuance during the first half of 2022.”

The momentum is expected to continue through to the end of December as ILS further establishes itself as a valued asset class and risk transfer mechanism used by organisations seeking to make better decisions as they deploy capital, he says.

At $US8 billion ($11.9 billion), first half catastrophe bond issuance was $US500 million ($742 million) less than the record six-month primary issuance figure recorded in the first half of last year.

The Aon Report, Alternative Capital: Growing Markets, says ILS capital markets capacity remained relatively stable at $US95 billion ($140.9 billion) through June 30, with the total including collateralised reinsurance, catastrophe bonds, industry loss warranties and sidecars.

The total dropped about 2% relative to $US97 billion ($143.9 billion) in the prior-year period.

As of end June there was $US36 billion ($53.4 billion) of outstanding catastrophe bonds, up 8% from $US33 billion ($48.9 billion) a year earlier.