The global catastrophe bond market remains strong as the fourth quarter begins after a period of sustained growth over the past 18 months, said Richard Penay, CEO of Aon’s ILS division. are.
Mr Penay told Insurer TV that the expansion of the cat bond market into new geographies and additional risks have driven continued growth in the sector over the past 18 months.
“We’re seeing expansion into broader markets. We’ve recently seen deals in Mexico, Jamaica, Puerto Rico, and even Europe and Japan,” he said.
“I think there have been a number of notable milestones in the market over the last 12 months.As stated in the report, the market has grown by approximately 18% in the last year. There are exactly 100 companies entering and exiting the bond market.”
US cat bonds have improved profitability over the past 18 months, primarily due to a quiet 2023 hurricane season and increased demand for real estate line capacity. Penay believes this profitability will continue and help the market continue to grow at its current pace.
“This is the first time we have over 100 companies participating, so we expect that growth to continue well into the fourth quarter. So the market is still very strong at the moment.
“Investors have seen strong returns and think that sentiment will continue, so there should be plenty of appetite to continue to maintain that level of growth into the end of the year,” Penay said. said.
Cyber cat bond
Cybercat bonds have been a major part of the breakout of the ILS market over the past 18 months, and Penay was bullish on Aon’s involvement in the space, seeing the market as poised for growth.
“Aon remains very supportive of cyber developments, having been involved in a number of transactions, and with demand for capacity and investor focus on cyber bonds, this market will continue to grow. I remain optimistic and bullish that it will continue.”Today is going pretty well. ”
“We’ve seen a number of trades take place, and those trades are actually trading relatively well on the secondary market as well. So we’re confident that the market will continue to grow.” Penei said.
However, he noted that it may take time for Cybercat bonds to become fully popular, as ceding companies need to familiarize themselves with the nuances of bond structure.
“Now, the extent of that growth is really going to be determined by the propensity of ceding companies to move into cat bond structures. I think that’s going to take time. I think it’s going to take companies a lot of time to really evaluate and understand before they come in. There is a need,” Penei explained.
Read the full interview to learn more.
New Investors Enter Cybercat Bonds Sidecar Secondary Risk Market Remains Constrained
Publication date: Friday, October 4, 2024
