ILS inflows accelerating in casualty, MGAs, cyber and sidecars: Howden

According to broking group Howden, inflows are accelerating in ILS arrangements for casualty, managing general agents (MGAs), cyber insurance-linked securities (cyber ILS) and reinsurance sidecars, as capacity providers look to grow existing premium pools.

In fact, the broker notes that capital deployments will be focused towards areas where sustainable underwriting returns align with acute, unmet client need.

In their latest reinsurance renewals report, Howden states that the ILS market is “strongly placed to deliver.”

“Capital positions are robust, and incumbents are demonstrating strong appetite for growth having reported stellar results and generated additional capital from strong earnings,” the broker explained.

Moreover, in a cycle that is set apart by longevity and checked underwriting appetite (rather than capital destruction), Howden notes, that the degree of deployable capacity in the marketplace marks an “important break with the recent past and offers more favourable conditions for buyers as competition builds”.

In fact, this was clearly evident in 2024 for the commercial markets as well as during the January 1st reinsurance renewals, where a feat of healthy supply dynamics across several lines of business led to risk-adjusted rate reductions being seen for the first time since 2017.

If you recall, estimates from Howden at 1/1 showed that risk-adjusted pricing for property catastrophe treaty business declined by 8%, while retrocession pricing fell further by 13.5%.

The broker also added that pricing remains well above pre-correction levels, and strong margins are now attracting investment flows, following what continues to be one of the better underwriting environments the industry has seen in years.

Howden claims that the launch of two balance sheet reinsurance start-ups for 1/1, along with long-standing investor interest in the ILS market, is a testament to the “compelling proposition provided by current conditions.”

This is worth highlighting given the attractive returns that are currently available in other respective asset classes.

In addition, the broker states that helping insurers manage earnings volatility will be a key area of focus for the reinsurance market throughout 2025.

You can read all about the many reinsurance sidecar investments and transactions over the history of the ILS market, by visiting our comprehensive list of collateralized reinsurance sidecars transactions.

Readers can also analyse details of almost every cat bond ever issued and filter the list by peril to show only cyber cat bonds.