Catastrophe bonds are an integral part of the insurance ecosystem: Schultz, Aon Securities

Just over twenty-five years after issuing what is considered the first truly widely syndicated catastrophe bond transaction, the structure has cemented its role within the insurance ecosystem, according to the CEO of ‘Aon Securities, Paul Schultz.

Commenting on the record year for 144A catastrophe bond issuance seen in 2021, Schultz of Aon Securities, the investment banking and insurance-related securities arm of the insurance and reinsurance brokerage, noted the significant role that brokers have played in the development of the cat bond market.

Aon Securities booked $12.5 billion in real estate catastrophe bond issues in 2021, of which the company actively participated in the placement of $7 billion.

Our 2021 issuance breakdown had the same $12.5 billion of cat 144A bonds, plus an additional $470 million of cat bonds spanning other insurance lines of business, and just over a billion in private class bond transactions.

Aon Securities estimates the outstanding catastrophe bond market at over $32 billion at the end of 2021, which compares to the $35.9 billion we counted, including the other line of cat bonds. cat and private transactions.

Finally, statistically, Aon Securities cites $117 billion in catastrophe bonds issued over the past 25 years, since the historic late 1996 George Town Re Ltd., the first transaction in our Directory of offers.

If you include the other cat cat bond lines and private transactions, we have this cumulative issuance figure of nearly $135 billion of cat cat bond issuances over the same period.

Commenting on its participation in the growth of the catastrophe bond market, Aon explained, “Aon Securities has consistently led the market in advising clients on the structuring and distribution of catastrophe bonds, and in 2021 captured a marketing leading 54% of emissions. Since the creation of the market in 1997, Aon Securities has been the leading investment bank, with a share of 39% of issues over the period.

Another statistic that might be helpful is that we have Aon Securities ranked number one in our ranking of issuing banks and ILS brokers, with the largest share of the current open market and an impressive 56 cat bonds and related transactions currently open to which he has participated.

Paul Schultz, CEO of Aon Securities, said, “As organizations navigate new forms of volatility, Aon Securities has helped them rethink access to capital, with catastrophe bonds becoming an integral part of the ecosystem of insurance.

“In addition to their large-scale growth, catastrophe bonds have evolved to cover a wide range of perils, geographies, triggers and sponsors through some of the most innovative risk transfer structures, and have demonstrated their ability to provide protection for property, accident, life and health risks.

“As a testament to its commitment to nurturing and growing the market and ensuring the most effective capital solutions are available to insurance, reinsurance, corporate and government companies, Aon Securities is proud to have brought new sources of capital to address risk, while continuing to increase its representation of top-tier issues in the market.

Aon Securities highlights the continued evolution of options and hedging structures, with catastrophe bonds becoming an integral part of risk management for insurance and reinsurance companies and increasingly public entities, governments and businesses around the world.

Richard Pennay, CEO of Insurance-Linked Securities for Aon Securities, also said: “The expansion of sponsors, the development of structures and the innovation of the sector give tremendous confidence in the ability of capital markets to continue to respond. to the evolution of risk management. needs of tomorrow, while helping to meet the needs of the underserved.

“If it weren’t for the vision of insurance, reinsurance, corporate and government sponsors, the engagement of the investment community, and the creativity and guidance of Aon Securities and brokers worldwide, the catastrophe bond market would not be where it is today – and for that, we thank all participants. As the global risk landscape changes, we believe that the reputation for innovation of history of the catastrophe bond industry, which began 25 years ago, will continue for years to come,” Schultz concluded.

Read also : George Town Re’s Silver Jubilee – $135 billion catastrophe bond tracked.

Access all of our charts on the catastrophe bond and insurance-linked securities (ILS) market here.