Private ILS offers better spreads than cat bonds; market remains attractive: Ruoff, Schroders Capital

Despite a decrease in spread multiples, the private insurance-linked securities (ILS) market continues to remain attractive both in absolute terms and in comparison, to the catastrophe bond market, Stephan Ruoff from Schroders Capital told Artemis.

Ruoff, who serves as Co-Head of Private Debt & Credit Alternatives, Chairman ILS at Schroders Capital, recently spoke to Artemis to share what the organisations outlook is for the private ILS sector in 2026.

Private ILS strategies, such as collateralized reinsurance, retrocession and other privately negotiated placements, showed demonstrated heightened activity and investor engagement throughout 2025.

While public catastrophe bonds grew substantially throughout 2025, private ILS deals also experienced deep momentum, with 2025 private cat bond issuance exceeding the full-year amounts of several recent years.

To read more about this, download your copy of Artemis’ Q4 and full year 2025 catastrophe bond and related insurance-linked securities (ILS) market report.

Reflecting on the momentum seen throughout 2025, Ruoff outlined the potential opportunities he anticipates for the private ILS sector in 2026.

“The situation in the private ILS market reflects what is happening in the cat bond market; but to a lesser degree. The private ILS market is more closely linked to the traditional reinsurance market and the transaction structures are more varied than those of cat bonds.,” the Chairman explained.

He continued: “Furthermore the inflows to private ILS funds have been lower than those into cat bond funds. This is partly because there is a higher barrier to entry for managers of private ILS funds due to the need for strong risk analysis and business origination capabilities.

“As a result the private ILS market still shows better spread multiples than the cat bond market, and despite reductions in those multiples, the market continues to be attractive on both an absolute and a relative to the cat bond market basis.”

To end, we asked Ruoff to share what Schroders Capital’s priorities and areas of focus are for 2026.

“We will continue to take the long-term view on behalf of our clients. To that end we will continue to invest in our analytical capabilities because we believe that the ability to assess risk and to ensure that the risk is compensated adequately is a huge differentiator among managers and will become apparent in performance over the long term.”

“The January 2025 wildfires provided a case study in the large differences between the risk as presented in a number of catastrophe bonds and our view of the risk, and by passing on most of those transactions our funds’ performances were better than many others,” Ruoff concluded.

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