Earlier this year, rating agency AM Best and reinsurance broker Guy Carpenter had projected that third-party capital in reinsurance, so alternative capital or insurance-linked securities (ILS) market capacity, would end 2023 at $99 billion, but the market has actually outpaced this forecast.
Now, Guy Carpenter has reported that the latest estimate from it and AM Best is that dedicated reinsurance capital grew by 12% over the full-year 2023, which puts it now at the second highest level since 2021 and well on its way back to reaching a new high in 2024, we suspect.
After the middle of this year, AM Best and Guy Carpenter had estimated that dedicated reinsurance capital would end the year at $560 billion, consisting of $461 billion of traditional reinsurance capital and $99 billion of capital from the ILS market, so made up of catastrophe bonds, collateralized reinsurance and other ILS instruments backed by third-party investors, such as sidecars.
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