Deployable ILS capital has risen faster for Hiscox, expected to keep growing: CEO Aki Hussain

While the insurance-linked securities (ILS) business at Hiscox Capital Partners has seen its headline assets under management (AUM) figure rise, this underplays the fact deployable ILS capital has risen more thanks to returns of older capital being outpaced by new flows, and Hiscox Group’s CEO believes the deployable total will keep growing.

As we reported this morning, Hiscox Capital Partners, the division of Hiscox Re that encompasses insurance-linked securities (ILS) investments and quota-share partnerships, lifted its ILS assets under management (AUM) to $1.5 billion at January 1st 2026, benefiting from $330 million of inflows over the last year that served to increase deployable capital for the unit.

Speaking during an analyst call today, Hiscox Group CEO Aki Hussain’s comments suggest that the headline AUM growth was actually outpaced by growth in deployable ILS capital, enabling the Hiscox Capital Partners unit to have more firepower for the renewals and the coming year it seems.

Hussain explained, “At this point in the cycle, last year and this year, we have seen increased interest in third-party capital coming in to benefit from our underwriting.

“The AUM has increased from $1.4 billion at the start of last year to $1.5 billion at the start of this year, albeit that deployable capital has gone up a little bit more because we have some outflows and then some new money coming in.”

That suggests the outflows have been at least in part related to capital that could not be deployed, so either trapped or tied up collateral. With that exited and new inflows more than replacing, it should mean Hiscox’s deployable ILS firepower is now higher in 2026.

Hussain also explained more background to the recent rebrand of the third-party capital activities under Hiscox Re & ILS to Hiscox Capital Partners.

“In terms of Hiscox Re and the reorganisation to create Hiscox Capital Partners, as you know, we’ve had a long-term strategy using third-party capital that wants to access the fantastic underwriting capability of our Hiscox reinsurance business,” Hussain explained.

Adding that, “We’ve had a number of different verticals. We’ve had traditional capital in the form of quota share partners, we created ILS funds just over 10, years ago and those have evolved with a number of ILS funds with different risk levels. We have an SPV, we have sidecars, we’ve also then expanded into cat bond fund capabilities.

“Frankly, Re and ILS was a nomenclature which no longer describes what we actually do. It is much more mature and much more sophisticated in terms of the different capital bases that we’re managing.”

During the investor and analyst focused session, Paul Cooper, Group CFO of Hiscox commented on the ILS fee income earned in 2025.

“Fee income of $109 million is very healthy, above $100 million for the third consecutive year. We continue to see strong interest in our ILS funds, with more than $330 million raised in the last year and a robust pipeline for 2026,” he explained.

Cooper further highlighted how writing more business for third-party capital can change the earnings mix in reinsurance for Hiscox, saying, “As we continue to see strong capital inflows from third-parties, while managing our own net exposure to property cat perils, the earnings mix between fee income and underwriting will continue to evolve.”

Hussain commented that the expectation is for Hiscox’s net cat exposure to remain relatively flat, “In reinsurance, following strong growth in recent years, in 2026 we expect to maintain our natural catastrophe exposures broadly flat on a net basis, while we are continuing to seek out growth opportunities in specialty classes.”

Later in the session, Hiscox CEO Aki Hussain also explained how the firm thinks about the ILS fee income it earns.

He commented that, “In terms of fees, the last three years of fees have been in excess of $100 million, so a nice contributor to the reinsurance business and to the overall group. The fees are structured essentially in two forms. So you have a fixed component and you have a profit commission component and over the last few years, because of the underwriting results, the profit commission component has increased quite significantly, getting us to over $100 million.

“What we have done, over the last couple of years, is also restructure some of those fees, so now the majority are fixed in terms of where that fee income will go.”

On the future trajectory for fees, Hussain implied that he anticipates ILS assets under management are likely to increase further for Hiscox Capital Partners.

“There’s two major drivers, one is the quantum of third-party capital that we’re able to deploy. I think that is going to grow, so that will push the fee income up,” Hussain said. But qualified this by adding, “But then it’s down to the actual results. Whilst the majority is now fixed versus PC (profit commission), the PC is still pretty significant, and that will be determined by the outcome of the underwriting results.”

Hiscox Capital Partners is just one of the specialist managers of catastrophe bond and ILS funds listed in our Insurance Linked Securities (ILS) Investment Managers & Funds Directory.