This content is copyright to www.artemis.bm<\/a> and should not appear anywhere else, or an infringement has occurred.<\/p>\n

Third-party capital in the reinsurance market reached record highs in 2024, as broker Guy Carpenter, alongside rating agency AM Best estimated that it reached a substantial $107 billion at year-end,<\/a> however, a key driver of the increase is the continued growth of the insurance-linked securities (ILS) market, which is the major component of third-party capital across reinsurance.
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\nAM Best recently hosted a webinar which featured notable figures across the reinsurance industry, who discussed their reactions to the 1\/1 renewals, as well as what they expect to see happen across the sector in 2025.<\/p>\n

During the webinar, Carlos Wong-Fupuy, senior director, AM Best, highlighted third-party capital’s record performance in 2024, and then focused attention towards the role that ILS plays towards reshaping reinsurance capacity and pricing dynamics.<\/p>\n

“I think that if ten years ago we were talking about ILS being a significant competitor to traditional capital, these days they are more in a converging role and working together,\u201d said Wong-Fupuy.<\/p>\n

He continued: \u201cWe see a lot of this increase on ILS capacity is actually from affiliated ILS funds, and a number of large-rated balance sheets actually have a ILS platform, which means that companies are working in such a way that they’re offering is sometimes actually contingent to having ILS capacity where they can reallocate risks depending on infrastructure appetite.”<\/p>\n

Moreover, a recent report from AM Best highlighted how underlying ILS capital expanded throughout 2024 due to a large quantity of investors reinvesting their earnings across the market, which ultimately further expanded deployable ILS capacity.<\/a><\/p>\n

In addition, Wong-Fupuy also commented on what role the hardening property reinsurance market plays towards shaping investor confidence going into 2025.<\/p>\n

\u201cI think that with the investors, especially on the ILS side, we have seen this reinvestment of returns. So, let’s remember, this is a segment that in the last few years is producing double digit returns, as close or in excess of 20%. Even with all the issues that we have been discussing, we are projecting something around probably around 15% or 17%, for the next couple of years,\u201d he said.<\/p>\n

\u201cI mentioned earlier the risk premium that investors are assigning to that, so they are not expecting this to last for too long. Having said that we have a much higher interest rate environment as well.”<\/p>\n

Wong-Fupuy also emphasized the need for a balanced approach to deploying capital and managing investor expectations.<\/p>\n

“So, on the one hand, I think that the high returns that the segment is showing are achievable, but we have a cause of opportunity, which means that from an investor’s point of view, there are probably other lower risk alternatives which show the strong returns as well.”<\/p>\n

ILS and reinsurance increasingly working together: Wong-Fupuy, AM Best<\/a> was published by: www.Artemis.bm<\/a>
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This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred. Third-party capital in the reinsurance market reached record highs in 2024, as broker Guy Carpenter, alongside rating agency AM Best estimated that it reached a substantial $107 billion at year-end, however, a key…<\/p>\n

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