The insurance-linked securities market saw a record amount of activity in the first quarter of 2012, Aon Benfield Securities said today.
Catastrophe bond issuance for the first three months of the year totaled $1.49bn, spread across nine transactions, according to the investment banking division of global reinsurance intermediary Aon Benfield.
A further free catastrophe bonds, totalling $495bn, were priced in the quarter but did not close until the second quarter of 2012, it added.
Aon Benfield's ILS indices in the ILS First Quarter Update 2012 detailed negative returns for the quarter, which it said principally reflected spread widening. The All Bond index decreased by 0.06% and the BB Rated Bond index fell by 0.14% - an improvement over returns for the first quarter of 2011, when the mark-to-market losses from the Japanese earthquake had an impact.
Q1 of this year also saw the US Hurricane Bond and US Earthquake Bond Indices fall - by 0.32% and 0.17% respectively.
Paul Schultz, chief executive officer of Aon Benfield Securities, said: 'We are very pleased with the record volumes of ILS activity we saw in the market during the first quarter of 2012, which highlights the importance of ILS as both a risk transfer vehicle and an investment product.
'We believe that the market fundamentals are conducive to further growth in this sector and very pleased that issuance in the first quarter of 2012 came from both new and repeat sponsors."
Aon Benfield Securities forecasts that full year 2012 ILS issuance will be in the range of between $5bn and $6bn.