In the current market environment, cedents choosing to sponsor catastrophe bonds can benefit from more favourable economics than with traditional reinsurance covers in some risk layers, rating agency AM Best has said.
AM Best has published a detailed new report on catastrophe bonds and insurance-linked securities (ILS), describing the ILS market as having grown from niche to established, with cat bonds in particular becoming “a core component of reinsurance programs rather than an opportunistic tool.”
Across ILS, AM Best is projecting further growth for 2026, but believe this could be at a slower pace than we saw last year.
The main reason being that the rating agency anticipates some “investors might take some profits rather than redeploy as the market continues to soften,” which is something already being seen in how assets under management are stabilising at certain manages of ILS strategies after three very strong year’s of returns.
FULL ORIGINAL PUBLICATION HERE