Cat bonds jump 20.5% in Q2 with ILS at record levels

Second-quarter catastrophe bond issuance reached $8.34bn, 20.5% higher than the same period last year that set the previous Q2 record, according to Aon. The last 12 months have now seen record-breaking ILS activity, with 2024 on course it hit a new high, the broker adds.

The first quarter of 2024 saw $3.87bn of new cat bond issuance and Q4 2023 $5.31bn, both quarterly records, according to the report data. This marks an “extraordinary” past three quarters for the ILS market, Aon says.

Through the end of the second-quarter 2024, new issuance totalled $12.22bn, well on pace to surpass 2023’s record $15.38bn in annual new property cat bond issuance.

For the 12-month period ended 30 June, a record-breaking 64 issuing entities brought 76 catastrophe bond transactions to market. This increased the total size of the market to $45.6bn, an increase of nearly 18% over the prior year, Aon said.

This included the introduction of cyber risk to the sector, with five cyber catastrophe bonds totalling $575m brought to market during the period, Aon said.

Government-sponsored cat bonds increased their share of the market for the 12-month period, rising to 32.1% from 28.4% over the previous five years, report data showed.

Richard Pennay, CEO of ILS for Aon, said: “The past 12 months can be characterised as a year of records, and the growth of the ILS market comes at a time when risk transfer needs are at their greatest. Inflation, evolving weather trends, and ambitious moves to close the protection gap have all driven demands for greater insurance and reinsurance capacity.”