Flexibility will be rewarded as capacity floods market: Kumar, Marsh Securities CEO

Insurance-linked securities investors must broaden their mandates or risk losing relevance with cedents in a softening reinsurance market flush with capacity, according to Shiv Kumar, CEO of Marsh Securities, speaking in an interview at the 2026 Rendez-Vous de Septembre.

As traditional reinsurers continue to offer cedents breadth across the board, Kumar argued, ILS investors can no longer afford to confine themselves to remote risk, per-occurrence, named-peril covers.

Those willing to be flexible and constructive, he said, will be the ones who win client business.

Speaking with Artemis at the 68th edition of the event in Monaco, Kumar observed that the catastrophe bond market has performed well for investors in recent years.

Issuance has increased substantially, new cedents have entered the market, and loss experience has been favourable, he noted.

“Meaningful risk-free collateral yields are mitigating some of the impact of softening rates.  New capital is flowing into the space and retained earnings are accumulating,” Kumar said.

He added that from a cedents’ perspective, the availability of this capacity provides an alternative to the traditional rated markets.

“That increased optionality, a broader capacity base, and greater diversity across their programs are all clear benefits for clients,” Kumar said.

Despite these positive tailwinds, the Marsh Securities CEO suggested there is increasing competition between the ILS and traditional players.

Kumar explained, “Cat bonds have the benefit of fully collateralised protection on a multiyear basis, but they lack reinstatement and the same breadth of coverage.

“While these issues can be solved through inuring or other structural features, it would be helpful for investors to step up and match the traditional coverage where possible.

“The cat bond market currently provides approximately 10% of the total global cat limit, and it will have to be more creative to grow that market share in a softening rate environment.

“Newer property sidecar structures for MGAs and aggregators have become popular as they bring efficient capacity to the table behind fronting carriers by separating cat and attritional risk in net quota share arrangements. These should continue to evolve with the growth in the MGA ecosystem.

“It is interesting to see financial investors come into the ILS space to support longer-dated sidecars for casualty lines or bundled ceded re portfolios.  The investors are taking a total return perspective and combining underwriting margin with ‘float’ income.

“These structures are complex and need to be put together with great care to balance leverage, duration, asset management and commutation issues.

“We expect this activity to continue to grow as cedents explore Bermuda and Lloyd’s set-ups and investors experiment with a variety of credit strategies on the asset side.

“As rating agencies and regulators review these transactions, we hope that there will be some standardisation of terms across the market.”

Kumar also shared his thoughts on the top priorities ILS managers should focus on when meeting with investors and cedents.

The executive continued, “The ILS managers should emphasise to their end investors that in order for them to stay relevant in a softening market with abundant capacity, they need to have broader mandates.

“The cedents want support across the board and will reward those counterparties who can be flexible and constructive.  ILS investors cannot be limiting themselves to remote risk, per-occurrence, named perils covers.

“As severe weather and wildfire events increase, our clients need frequency and aggregate protection and lower retentions.

“Some cedents are trying to include terrorism and cyber risks in their property covers to be more efficient, and it will be good for the ILS market to support these types of efforts.”

Closing the interview, Kumar turned to the firm’s key priority following the rebrand. He said the firm is “very excited” about the new Marsh Securities name, noting that it clearly signals the firm’s place within the wider Marsh organisation.

The executive concluded, “It also brings us closer to the overall organisation, enhances our resources through collaboration with our affiliates and, most importantly, expands the range of our client dialogue.

“Our focus remains exactly the same as before. Our mandate is to find the best solution for our clients while being product agnostic.  We will continue to provide our clients rigorous technical advice and deep market intelligence.  We can now execute across the whole spectrum of capital markets transactions and traditional rated placements for all of our Marsh clients.”

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