December 5, 2023

While the insurance-linked securities (ILS) market is now starting to return to broader growth, and there have been some successful fundraisings in the private ILS and mortgage reinsurance space, the cat bond market is still leading the way as the main source of ILS market growth in 2023 Aon Securities latest data display.

The broker recently released its latest reinsurance market report, highlighting a return to growth in alternative reinsurance capital and hitting a new high of $100 billion by the end of the first quarter of 2023.

Aon highlighted the very strong catastrophe bond market as one of the main sources of capital inflows, helping to drive the ILS market back to growth and to new highs.

While we’re now hearing that capital is flowing aggressively (albeit in small amounts in some cases) into all major sectors of the ILS market in recent weeks, the cat bond market continued to hold the lion’s share in the first quarter of the year, it seems.

Aon noted that fresh capital raised by ILS funds flowing into the catastrophe bond market helped drive issuance up, but the latest data from Aon’s division showed that other major ILS products were relatively flat by the end of Q1 2023 (see below).


The graph shows that the growth trajectory of the cat bond market is picking up, but other ILS segments remain relatively flat.

The catastrophe bond market has clearly been the fastest growing and the largest in recent months. Our latest quarterly report detailing cat bond market activity through Q2 2023 noted that outstanding cat bond and related ILS venture capital rose an impressive 10% to nearly $41.6 billion in the first half of 2023. deep impression.

We are now hearing more and more about private ILS funds and financing of mortgage reinsurance or retrocession strategies, and some sidecar financing.

As such, we do expect that Aon’s next update to the chart above (by mid-year) may show a slight increase in the scope of mortgage reinsurance and other ILS strategies, as this segment is now expected to be the recipient’s most recent funding activity.

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