Price adequacy is essential as ILS expands into casualty, specialty, and cyber: Artex’s Faries

As the ILS market expands its reach across casualty, specialty, and cyber, maintaining price adequacy remains a critical boundary for market growth. Speaking with Artemis at the 2026 Monte Carlo Rendez-Vous, Kathleen Faries, CEO of Artex Capital Solutions, outlined her expectations for emerging perils and evolving deal structures heading towards 2027, emphasising that rates must remain adequate to keep alternative capital committed.

Beginning with cyber, Faries noted: “I think cyber’s been super interesting to watch because anybody that’s deploying capital is looking for demand and a sizable opportunity. What is the size of the opportunity? What kind of return can I get on that opportunity? And so, we all thought cyber would be sizable, but the demand so far has not materialized.”

The CEO highlighted data centers as a catalyst for opportunity: “Data centers are shaping up as the next “big opportunity”. However, what will be interesting is to see what the demand is for alternative capital to support that risk. But now people are looking in that direction because the potential is there. But it’s always a supply, demand, and return equation.”

Turning to casualty, Faries explained that she sees sustained momentum ahead, adding: “Overall, I think there is further opportunity in casualty so we expect that growth to continue into 2027.”

On specialty lines, Faries pointed to key market mechanisms facilitating institutional capital deployment: “Regarding specialty, we are involved in London Bridge 2 in the UK, which is the vehicle that efficiently delivers capital supporting Lloyd’s Syndicates. We manage that vehicle, and interest has been robust in 2026. They’re up to 40 segregated accounts, and about $3.2 billion of capital coming in through that vehicle.”

Underpinning these growth avenues, however, is the need to preserve price adequacy to prevent investors from reallocating capital elsewhere.

Looking ahead to the final stretch of 2026 and into 2027, Faries concluded: “We are optimistic about 2027. I think we have to watch the price adequacy and the softening to make sure that we don’t dip below a threshold that will cause investors to think about whether to deploy their capital elsewhere, but I don’t think we’re there yet.”

As the ILS space continues to tap into hybrid, casualty, and specialty structures, operational complexity is also rising sharply. Given this, Faries explained to Artemis how Artex is keeping administration efficient and cost-effective as deal structures become more bespoke.

“I think the critical thing to remember is that as the market evolves, the management and the administration of those structures needs to evolve too, and that’s what Artex is trying to do,” the CEO said.

“For example, we’re making sure that we have the right talent that understands these different types of structures Because, we’re now dealing with casualty, specialty, and cyber, which requires a different skill set than that of property cat, and there’s different things to think about around collateral.”

She continued: “On the casualty side, you’ve got active management of the asset side of the balance sheet the administration and the financial statements have to understand that complexity. So, there’s both the management of the transactions as well as the infrastructure that needs to evolve, which we’re thinking very seriously about, which may mean building bespoke infrastructure like Artex Axcell for casualty.”

With casualty ILS becoming a more prominent fixture of the global ILS market, Faries underscored the importance of having a good understanding of the different types of risks that are involved in this lines of business.

“It’s an interesting class because of its duration and complexity. There’s different risks around transforming this line of business. And ensuring that we have a good understanding of all the risks involved is critical. Those are the things that we will continue to work on at Artex,” Faries concluded.

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