Cat bond capacity must follow genuine opportunity as issuance surges: Icosa’s Dell’Amore

As Rule 144A property catastrophe bond issuance continues to surge, spreads have also been compressed through a combination of reinsurance rates softening and high levels of capital and investor appetite, given this, Dr. Raffaele Dell’Amore, Partner at Icosa Investments AG, has stressed to Artemis that market capacity must follow genuine opportunity, rather than capital outstripping demand.

Speaking to Artemis around the start of the reinsurance conference season, Dell’Amore outlined that while cat bond issuance growth is a positive development, this alone does not fully articulate whether the growth is fully sustainable.

Catastrophe bond issuance growth has continued to increase heavily throughout 2026, with H1 2026 setting new cat bond market records.

At the same time, the outstanding catastrophe bond market also stands at a record high of $65.6 billion.

“Growth is a positive development, but headline issuance alone does not tell us whether it is sustainable. The more interesting question is what drives the investable opportunity set: genuinely broader demand from cedents and new sponsors, or more capital competing for a similar pool of risk,” Dell’Amore said.

He added: “The same lens applies to managers: where assets grow materially faster than the underlying market, natural questions arise about concentration, liquidity, risk appetite and expected returns. Spread compression is itself a feature of a competitive, successful market. The principle that matters, in our view, is that capacity should follow opportunity, not the other way around.”

In recent years, the ILS market has expanded into a range of new perils and lines such as cyber, casualty and specialty. Looking ahead, Dell’Amore foresees this expansion continuing, but stresses that it should not come at the expense of underlying the investment proposition.

“We expect the ILS market to keep expanding, which is in itself a positive, provided expansion does not come at the expense of clarity about the underlying investment proposition. New risk areas are best assessed on their own characteristics rather than assumed to replicate property catastrophe ILS,” Dell’Amore explained.

“Within what we call Evolving ILS, cyber is a relatively natural extension, though modelling, contractual definitions and standardisation must keep improving, and the interaction of a truly systemic cyber event with broader financial markets remains untested,” he continued.

As for casualty, Dell’Amore said: “Casualty ILS introduces longer-tail, less event-driven exposures with a meaningful financial-market component; in our view it is best understood as complementary to, rather than interchangeable with, Foundational ILS.”

We then asked Dell’Amore to explain what key factors investors should be considering as they look for opportunities to deploy capital in the ILS market, as well as how they assess different managers too.

Importantly, Dell’Amore highlighted the importance that the market could play within an investors portfolio.

“In our view, the natural starting point is clarity about the role ILS is expected to play in a portfolio:  cat bonds, private property catastrophe, cyber and casualty all sit under one label but differ materially in risk, liquidity and diversification characteristics,” he said.

“On managers, we believe recent headline returns tell only part of the story. How they were generated is the more informative question: the risks selected and avoided (the latter probably even more important), concentration, valuation practices and how a portfolio evolved with the market. The period since 2017, spanning major losses, trapped collateral, hardening and renewed competition, is a particularly telling test.”

For Dell’Amore, evaluating how an ILS manager navigated those conditions comes down to core principles over short-term metrics.

“Ultimately, we see manager assessment as a question of consistency between philosophy, communication and behaviour. In a cyclical asset class, that alignment is often more informative than a strong recent track record alone,” he concluded.

Read all of our interviews with ILS market and reinsurance sector professionals here.