Aon reports 13% increase to $6bn in year-to-date cat bond placements

Insurance and reinsurance broker Aon reported today that year-to-date it has seen a 13% increase in catastrophe bond issuance volumes for the deals it has placed, while President Eric Andersen said the company remains agnostic as to form of coverage placed for clients, saying each has its place in the reinsurance capital stack.

Aon said in its third-quarter results today that it continues to have a leading position in catastrophe bond investment banking and broking.

Its placement work this year has been across 25 cat bond deals so far, together accounting for $6 billion in limit placed, which is approaching half of the issuance seen so far this year.

That represents a 13% increase over the prior year period, Aon reported, which reflects the continued record-pace of catastrophe bond issuance year-to-date.

According to Artemis’ Deal Directory data, Aon Securities, the investment banking and insurance-linked securities (ILS) arm of the broker, has played a role in placing almost $22.5 billion of the currently outstanding cat bond market.

Speaking during Aon’s earnings call today, President Eric Andersen explained that, for the company, it does not matter if risk is placed in catastrophe bond or reinsurance form, as each has its place and each deliver value for the brokers’ clients.

Andersen explained, “Our goal here is to get paid for value, for what we deliver for clients, whether it’s in the form of a reinsurance brokerage, whether it’s in the form of cat bonds.

“These are very sophisticated clients, and we have very sophisticated discussions around what our value proposition is in the structure.

“So we’re agnostic to the tool that they use, because they each have a role in their capital stack. In terms of, there are certain risks that belong in the capital markets, there are certain risks that belong in the reinsurance market, and our goal is to help the clients figure out which one it does.”

Continuing to say that, “For us, we’re agnostic to whether it’s a cat bond or whether it’s a traditional reinsurance placement.

“But rest assured, the conversation with each of the clients around our value for what we’re doing for them is very open and transparent.

“So for us, it doesn’t really matter which way it goes, because ultimately, we’re just trying to provide the right level of value to our clients.”