Secondary liquidity and standardized deal processes are essential factors that will help support the ongoing growth of the catastrophe bond and insurance-linked securities (ILS) market, according to Jean-Louis Monnier, Head of ILS at Swiss Re Capital Markets.
As the conference season kicks off, Monnier expects that rate adequacy, coverage needs and the overriding supply and demand balance of the ILS market will be key discussion points discussed during the 2025 Monte Carlo Rendez-Vous event.
“From the sponsor side, we believe the market is well positioned for new entrants (as evidenced by the number of new cedents that have come to market in the past 5-years),” said Monnier
Regarding cat bond sponsors, Monnier explained that investors continue to embrace the further diversification that new sponsors bring in both underwriting expertise and regional focus, and importantly have been able to absorb a step-function increase in cat bond issuance volume with ease.
As Artemis highlighted in its Q2 2025 Catastrophe Bond and ILS report, a joint record eight new sponsors entered the cat bond market in Q2’25, while issuance from repeat sponsors was also extremely strong during the period.
Monnier also noted that sponsor loss experience and claims handling practices for large catastrophe events will continue to play a role in selectivity when it comes to investors deploying capital.
“The ILS market has demonstrated a consistent ability to absorb more and more of the peak perils – the risk contribution from US Hurricane has grown to 70% of the total risk ceded – and the next challenge is to tackle cedants’ ever-increasing capacity needs on secondary perils such as Wildfire, Severe Convective Storms and Cyber,” Monnier explained.
He continued: “Over the first half of 2025, the ILS market has demonstrated the capacity and increasing investor appetite to handle rising issuance volumes. We believe secondary liquidity and standardized deal processes, including terms and conditions, will be essential in order to maintain attractiveness and market efficiency as it grows.”
Monnier further explained that large maturities in the latter part of Q2 often leave investors with greater cash positions during a period when new issuance volume typically slows down before moving into the peak points of the US hurricane season.
Offerings with longer-dated tenors, he suggested, could help stagger maturities and smooth capital deployment.
Turning towards Swiss Re Capital Markets themselves, Monnier said: “As a sponsor ourselves, we are uniquely positioned and aligned with the sponsor community in expanding the universe of risks ceded to the market, and the importance of articulating a differentiated story to investors.”
“This theme permeates everything we do, such as providing in-depth post issuance support for cedents through a dedicated business management team,” Monnier added.
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