Insurance-linked investments

As the insurance-linked securities (ILS) sector moves into 2026, one key challenge and opportunity that the market faces lies in the push for greater market liquidity, with senior executives from reinsurer Swiss Re noting that the space is still far from achieving robust daily pricing and dedicated liquidity providers.

Longtail Re, the casualty reinsurance underwriting vehicle operated by asset manager Stone Ridge, has delivered a 20% annualised return-on-equity (ROE) since its inception in 2020, while also building a more than $6 billion asset portfolio, according to CEO Ross Stevens.

With reinsurance sidecars having emerged as a key capital instrument for re/insurers aiming to utilise third-party capital, the current growth and momentum within the space has been concentrated in ceded reinsurance strategies, casualty-focused portfolios; and MGAs, MGUs and capital-light entities, according to broker Guy Carpenter.

According to Hiscox Re & ILS, successful navigation of the reinsurance cycle requires proactive portfolio management, where strategic capital allocation plays a central role alongside diversification, retention strategy, and asset allocation, traits that are all the more important at phases in the market cycle such as we see today.

The January 1st 2026 reinsurance renewals saw “accelerated softening” as excess capital in the market weighed on rates, while property catastrophe renewals saw double-digit declines with investor appetite for insurance-linked securities a contributing factor, according to broker Guy Carpenter.

During an interview, executives at Howden Capital Markets & Advisory outlined how the catastrophe bond market has evolved into a well-established asset class that helps strengthen systemic resilience for public and private entities, while also acknowledging how private ILS continues to present attractive opportunities for cedants and investors heading into 1.1 and beyond.

The Swiss Re Insurance-Linked Investment Advisors Corporation (SRILIAC) ILS investment management division of global reinsurance firm Swiss Re will start 2026 with a new CEO, as Leigh Weissman is being promoted to the position and Dr. Mariagiovanna Guatteri will then focus solely on leading the investment strategy as CIO.

Plenum Investments, the specialist manager of catastrophe bond and other reinsurance-linked assets, has announced that its two flagship CAT bond funds have achieved significant milestones, reaching a total combined volume of over $1.1 billion.

Al Wathba Insurance, an insurance company based in the United Arab Emirates operating out of Abu Dhabi and Dubai, has become the first insurer from the region to access the Lloyd’s of London insurance and reinsurance market using its London Bridge 2 PCC insurance-linked securities structure.

The casualty insurance-linked securities market (ILS) has experienced considerable momentum throughout 2025, with several transactions occurring in the latter half of the year, and according to Willis Re, the market is on a trajectory of potential exponential growth.