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Cat bond market drives ILS growth, moderate expansion to continue: Moody’s

According to Moody’s Investors Service, the catastrophe bond market remains the key driver of growth in insurance-linked securities (ILS), expecting a moderate pace of growth to continue as cat bonds become increasingly embedded into cedent reinsurance towers.

But a rapid growth phase for the cat bond market is not anticipated by the rating agency, because of continued investor concerns regarding climate risk and the fact alternative capital remains largely allocated to natural catastrophe risks in reinsurance.

Cat bond market growth is expected to continue through 2024, Moody’s said, while it believes that collateralized reinsurance has “yet to rebound” after a challenging period of loss activity at softer rates.

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