Specialised reinsurance broker Willis Re has identified increased activity in private insurance-linked securities (ILS), catastrophe bonds, and industry loss warranties (ILWs) as notable trends within the ILS market during 2025.
In a recent article, the broker explained that competition from alternative capital sources increased throughout 2025, with the firm particularly highlighting catastrophe bonds.
As we reported throughout last year, the catastrophe bond market had a landmark 2025, with it setting a high benchmark for annual issuance for future years to try and beat.
Cat bond issuance across full 144A and private transactions hit a record $25.6 billion of issuance in 2025, which took the outstanding market to a record $61.3 billion at year-end.
You can read more about this in Artemis’ Q4 2025 Catastrophe Bond and ILS Market Report.
“Cat bond returns are declining along with those of the rest of the reinsurance market, but they remain healthy at about 8%. That’s attracted new investors over the course of the year, as well as many new issuers,” Willis Re explained.
Adding: “Privately negotiated ILS placements are also on the rise. Capital deployed through collateralized reinsurance, whole-account quota share sidecars, industry loss warranties, and other structures is on the rise. Casualty ILS also saw a major growth spurt, prompting many to forecast that the sector is coming of age.”
Willis Re recently highlighted how the casualty ILS space experienced considerable momentum throughout 2025, with several transactions occurring in the latter half of the year, with the firm stating that the market is on a trajectory of potential exponential growth.
Furthermore, the broker also forecasts that in 2026 there will be continued new supply, alongside an easing of conditions and greater competition between reinsurers for cessions.
Willis Re notes that almost all segments showed a softening in reinsurance pricing over 2025, with further softening evident at the January 1st renewals.
Low losses, rising capacity and the reintroduction by reinsurers of previously limited aggregate excess of loss treaty capacity, are all positive for buyers of protection, Willis Re explained.
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