Insurance Linked Investments

CalPERS, the largest public pension fund in the United States, ended 2025 with its investments in catastrophe bond and insurance-linked securities (ILS) fund strategies amounting to $1.451 billion, with allocations in place with Tangency Capital, Integral ILS and Swiss Re’s SRILIAC.

Given the softening of reinsurance rates and compression in risk spreads across catastrophe bonds and insurance-linked securities, the expected return of ILS investments is generally at a lower level, but private bank and asset manager VP Bank AG has noted that the risk premium available to investors is still attractive.

SageSure, the specialist catastrophe-exposed property managing general underwriter (MGU), has sponsored its second collateralized reinsurance sidecar, securing $200 million of protection from a Seawall Re II Ltd. transaction.

The outstanding market for collateralized reinsurance sidecar structures has expanded rapidly, with estimates from rating agency AM Best valuing the space between $16 billion and $18 billion, which marks an 183% increase over the mid-point of the $5 billion to $7 billion range estimated by the agency in 2023.

As the insurance and reinsurance market responds to the growing risk capacity needs of the digital infrastructure and data centre build-out, collateralized insurance-linked securities and parametric risk transfer are playing a role in covering exposures such as correlated power grid events, according to Guy Carpenter’s Jeremy Goodman.

With building pressure and stresses in private credit investment markets in the headlines, the insurance-linked securities community should remember that a closely interlinked investor base means any fallout can have ramifications for the ILS asset class as well, Brad Corbett of Shuriken Capital Management told us.

With implications of the ongoing conflict in the Middle East cascading across financial markets, investors are assessing how individual asset classes might be affected. Catastrophe bonds remain remote to such geopolitical events, but there are indirect financial market linkages investors should be aware of, according to specialist catastrophe bond fund manager Icosa Investments.

UCITS catastrophe bond fund strategies delivered an average return of 0.46% for February 2026 taking their year-to-date performance to 1.00%, according to the Plenum CAT Bond UCITS Fund Indices.

At the January reinsurance renewals SCOR grew its North America catastrophe risk book, seeing pricing as still attractive and also expecting other opportunities to deploy more capacity there this year, while the reinsurer also expanded its Risk Partnerships business where third-party capital partners participate.

A new Gallagher Re white paper argues that blending cyber tail risk with uncorrelated property catastrophe risk in shared-limit reinsurance structures can lower pricing and improve efficiency for cedants, though the firm notes that long-term success will also require participation from the insurance-linked securities (ILS) market.