Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Aon Benfield launch ILS indices to help benchmark the industry


News reaches us this morning that Aon Benfield Securities are launching the Aon Benfield ILS Indices which will provide a quantitative monthly view of insurance-linked securities returns since December 2000.

The indices are going to track the performance of catastrophe bonds in four portfolio groups: All Bond, BB-rated Bond, U.S. Hurricane Bond and U.S. Earthquake Bond. Each index is a total return index so representing the return an investor would achieve. Thomson Reuters are calculating the index.

Paul Schultz, President of Aon Benfield Securities, said: “The launch and ongoing administration of the Aon Benfield ILS Indices demonstrate the firm’s continued leadership in the insurance-linked securities market. Additionally, we believe the added data and transparency will lead to new investment in this market and provide greater capital alternatives for our clients.”

A few recent trends highlighted by the Aon Benfield ILS Indices include:

  • All Bond Index posted a 12.85 percent return for the 12 months ending June 30, 2010 compared to 2.94 percent the prior year
  • The BB-rated Bond and Aon Benfield U.S. Hurricane Bond indices produced similar results at 12.95 percent and 15.18 percent returns respectively
  • The Aon Benfield U.S. Earthquake Bond index gained 7.04 percent

Aon plan to publish the indices through Thomson Reuters and Bloomberg financial news service.

Development of these types of indices are good for the market as they promote transparency, give investors a great way to track the market and allow for comparison with other financial instruments.

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