Aon reports double-digit growth in capital markets transactions

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Insurance and reinsurance broker Aon has had a good first-quarter in terms of insurance-linked securities (ILS), catastrophe bonds and other capital markets related reinsurance transactions, reporting double-digit year-on-year growth.

Aon logoAon reported its results today, revealing a 9% increase in profits for the first-quarter of 2019, as well as 6% organic revenue growth across the business, as reported earlier by our sister publication Reinsurance News.

The organic revenue growth figure increases to 9% year-on-year in the first-quarter for Aon’s Reinsurance Solutions business, which saw benefits across much of the transactions it facilitates on behalf of its insurance and reinsurance clients.

Aon reported strong net new business generation globally in the firms treaty reinsurance business, a positive quarter for the firm in a market where broker choice is sometimes an ingrained habit among ceding companies.

But, perhaps more impressive and clearly more relevant to us, Aon has also reported two areas where it experienced double-digit growth globally, these being in facultative reinsurance placements and in capital markets related reinsurance transactions.

It’s interesting, as we don’t have that many Q1 2019 catastrophe bonds listed in our Deal Directory where Aon Securities is marked as an involved structuring agent or bookrunner, only the $250m Bowline Re Ltd. (Series 2019-1) and $300m Sanders Re II Ltd. (Series 2019-1) deals.

However, we don’t have those details for the mortgage insurance-linked securities (ILS) transactions we have listed, or for other cat bonds such as State Farms Merna Re deal.

As Aon was a party to a World Bank cat bond amounting to over $1.1 billion and a Zenkyoren sponsored cat bond of $700m in size in Q1 2018, as well as some others, it seems the increase seen this year has to come from other forms of capital markets related reinsurance transactions, so possibly collateralized reinsurance.

Wherever the growth has come from, it’s perhaps an opportune time to double-down on winning new capital markets and collateralized reinsurance transactions for Aon, as its main rivals in the space Guy Carpenter are going through a merger integration currently.

Clearly Q1 has been profitable though and this growth in capital markets transactions bodes well for Aon’s profits through the rest of 2019 as well.

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