The growth of alternative capital in the catastrophe reinsurance market shows no sign of abating, according to Aon Benfield Securities.

Its annual report on the insurance-linked securities (ILS) sector says catastrophe bonds issued hit a record $US9.4 billion ($10.26 billion) in the year to June 30, up 41%.

Taking into account 11 sidecar transactions totalling $US1.4 billion ($1.5 billion), alternative capital has captured 20% of property catastrophe reinsurance volume.

Pricing for ILS products continues to decline, with reductions of 20% or more.

Aon Benfield Securities CEO Paul Schultz says the year was one of the sector’s strongest.

“The average duration of catastrophe bonds has increased steadily over the past three semi-annual issuance periods, but the main driver in the market expansion is the large amount of new issuance driven by highly favourable pricing conditions.”