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Reinsurance Industry Retains Capital Markets Appetite Despite Headwinds, According to Aon Benfield Securities ILS Review

CHICAGO, Aug. 31, 2011 /PRNewswire/ -- Aon Benfield Securities, the investment banking subsidiary of Aon Corporation (NYSE: AON), today releases its annual Insurance Linked Securities (ILS) report, which examines the trends witnessed in the ILS sector over the 12-month period ending 30 June 2011.


"Consistency and Confidence" reveals that 24 separate catastrophe bond transactions resulted in an annual issuance volume of USD4.4 billion to June 30, 2011 – a slight decrease from the USD4.7 billion across 21 transactions seen in the prior year period. Also, sidecars experienced resurgence in 2011, further demonstrating investors' interest to continue to provide fresh capital after market losses.  Catastrophe bonds outstanding at June 30, 2011 totaled USD11.5 billion, with USD37.6 billion of cumulative catastrophe bond issuance since 1997.

Paul Schultz, President of Aon Benfield Securities, said: "Consistency in issuance, including strong participation from repeat issuers, demonstrated the continued reliance of both sponsors and investors on capital markets capacity.  Renewed interest in sidecar structures also demonstrates the flexibility of the ILS market to provide fresh capital following market losses.  Despite the effects of both the Great East Japan Earthquake on March 11 and the major updates of the RMS U.S. Hurricane and Europe Windstorm models, we anticipate a good catastrophe bond issuance pipeline in the historically active second half of the year.  Additionally, we believe the fundamentals are positive for market growth in 2012 and beyond."

U.S. hurricane risk continued to dominate the catastrophe bond market in the 12 months to June 30, 2011, accounting for 46 percent of natural catastrophe issuance while U.S. earthquake risk and Europe windstorm risk accounted for 15 percent and 19 percent, respectively.

All four of Aon Benfield's ILS Indices posted gains in the 12-month period to June 30, 2011. The Aon Benfield All Bond and BB-rated Bond indices recorded annual returns of 5.97 percent and 4.52 percent respectively, while the returns on the U.S. Hurricane and U.S. Earthquake Bond indices were 8.51 percent and 7.21 percent respectively. The current annual returns fell below comparable returns for the prior year period, with the exception of the U.S. Earthquake Bond index, which performed marginally better. The decrease was primarily due to the effects of global catastrophes and downgrades which had led to mark-to-market decreases in 2011.

To view the full Consistency and Confidence report, please click on the link below:

About Aon Benfield Securities

Aon Benfield Securities, Inc. and Aon Benfield Securities Limited (collectively, "Aon Benfield Securities") provide insurance and reinsurance clients with a full suite of insurance-linked securities products, including catastrophe bonds, contingent capital, sidecars, collateralized reinsurance, industry loss warranties, and derivative products. As one of the most experienced investment banking firm in this market, Aon Benfield Securities offers expert underwriting and placement of new debt and equity issues, financial and strategic advisory services, as well as a leading secondary trading desk. Aon Benfield Securities' integration with Aon Benfield Inc.'s reinsurance operation expands its capability to provide distinctive analytics, modeling, rating agency, and other consultative services. Aon Benfield Inc., Aon Benfield Securities, Inc. and Aon Benfield Securities Limited are all wholly-owned subsidiaries of Aon Corporation.  Securities advice, products and services described within this report are offered solely through Aon Benfield Securities, Inc. and/or Aon Benfield Securities Limited.

About Aon Benfield

Aon Benfield is redefining the role of the reinsurance intermediary and capital advisor. Aon Benfield offers unbiased capital advice and customized access to reinsurance and alternative markets around the globe. As a trusted advocate, we provide local reach to the world's markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial, and rating agency advisory, and the right professionals to advise clients in making the optimal capital choice for their business. With an international network of more than 80 offices in 50 countries, our worldwide client base is able to access the broadest portfolio of integrated capital solutions and services. Aon Benfield is also a wholly-owned subsidiary of Aon Corporation.

About Aon

Aon Corporation (NYSE:AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human resources solutions and outsourcing. Through its more than 60,000 colleagues worldwide, Aon unites to deliver distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally in over 120 countries. Named the world's best broker by Euromoney magazine's 2008, 2009 and 2010 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on revenues in 2007, 2008 and 2009, and Aon was voted best insurance intermediary 2007-2010, best reinsurance intermediary 2006-2010, best captives manager 2009-2010, and best employee benefits consulting firm 2007-2009 by the readers of Business Insurance. Visit for more information on Aon and to learn about Aon's global partnership and shirt sponsorship with Manchester United.

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