Insurance-linked securities market grows 10.5%, nears $50b notional value

The market benefited from strong issuance activity.

The insurance-linked securities (ILS) market continued to expand last year with a 10.5% year-on-year (YoY) increase, approaching the $50b mark in outstanding notional, Swiss Re revealed.

The market benefited from strong issuance activity, high coupon returns, and capital inflows, particularly from UCITS funds.  

Primary issuance reached $17.2b, with particularly active periods in the second and fourth quarters. Whilst US perils remained the dominant risk category, Swiss Re Capital Markets (SRCM) noted increased diversification, including expanded cyber risk coverage and the introduction of terrorism risk via France’s state-backed GAREAT program.  

The Swiss Re Cat Bond Total Return Index posted solid returns, though below 2023 levels, reinforcing the asset class’s appeal compared to other credit products. 

Despite a high number of global catastrophe losses, most events were of medium severity or involved secondary perils such as wildfires, hailstorms, and floods, which had limited impact on the ILS market.  

ILS instruments primarily cover peak perils like major hurricanes and earthquakes, but past event developments led to approximately $440m in recovery payments to sponsors in 2024.