Insurance-linked securities on the upswing

Insurance-linked securities (ILS) such as catastrophe bonds posted a record quarter in the first three months of 2012, an Aon Benfield Securities report notes.

Cat bonds issued for the period rose to a new high of $1.49 billion, with nine transactions closed during the quarter. Three more cat bonds worth $495 million were priced in early 2012, but did not close until the second quarter, according to the recently released Aon Benfield study.

Several of the insurance-linked securities involved Atlantic hurricane bonds, as well as issuances for earthquake and European windstorm bonds.

Aon Benfield Securities, a division of Aon Benfield global reinsurance broker, forecasts the ILS market to grow to between $5 billion and $6 billion for 2012.

In addition to cat bonds, ILS can include contingent capital, collateralized reinsurance, industry loss warranties, sidecars and derivatives.