Insurance-linked securities (ILS) capital has reached $US100 billion ($154.71 billion) and is “trending towards the greatest ever annual catastrophe bond issuance on record,” Aon says. 

Aon Securities CEO ILS Richard Pennay says 2023 has so far proven to be a much better year for both investors and issuing companies, and investors have benefited from the best catastrophe bond returns in over 20 years. 

The market growth has been welcomed by insurers, reinsurers and governments seeking to complement their risk transfer program with ILS, he says. 
 
“With the ILS market now in its third decade, its ability to bounce back and grow during a time of economic uncertainty and increasing natural catastrophe frequency is a true testament to its resiliency, and overall value proposition,” Mr Pennay said. 

The outstanding catastrophe bond limit grew 10% by end June from a year earlier as 2023 began with the largest first half issuance volume on record and is trending towards a record-breaking calendar year, Aon’s Alternative Capital: ILS Market Shows Resilience and Record Growth report says. 

“Demand remains as strong as ever—the cat bond market continues to see a diverse group of returning and new sponsors, including nine first-time sponsors,” Aon said.  

“Transactions continue to feature broad risk profiles with varying ranges of expected loss, regions of coverage and perils.”