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Cat bond record drives alternative capital market

The alternative capital market grew to a record $US88.8 billion ($110.2 billion) in the year to June 30, driven by all-time high issuance of catastrophe bonds, according to Aon Securities.

Catastrophe bonds totalling $US11.3 billion ($14 billion) were issued, eclipsing the previous record of $US9.4 billion ($11.7 billion) in 2014.

The total was up from $US6.1 billion ($7.6 billion) the previous year.

“The annual period saw a resurgence in alternative capital, particularly in the first and second quarters of [this year],” Aon Securities CEO Paul Schultz said.

“The uplift was partly due to the renewing of capacity across maturing catastrophe bonds, but was also a result of new sponsors coming to market, strong investor demand and the consequent upsizing of many of the insurance-linked security transactions.

“Aside from insurers and reinsurers, we saw notable interest in catastrophe bonds from public entities seeking to transfer risk.”

US exposures continue to dominate the market, accounting for 28 of the 32 transactions during the year. Bermuda remained the top special-purpose insurer domicile, with 26 issuances using the jurisdiction.

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