The insurance-linked securities (ILS) market saw significant growth in 2024, with a 10.5% year-on-year increase, bringing the total notional value close to $50 billion, according to Swiss Re.
This growth was fueled by robust issuance activity, attractive coupon returns, and substantial capital inflows, particularly from UCITS funds. Primary issuance reached $17.2 billion, with notable peaks in the second and fourth quarters of the year. While U.S. perils remained the dominant risk category, Swiss Re Capital Markets (SRCM) highlighted an increase in market diversification, with expanded coverage for cyber risks and the introduction of terrorism risk through France’s state-backed GAREAT program.
Despite a high frequency of global catastrophe events, many were of moderate severity or involved secondary perils such as wildfires, hailstorms, and floods, which had a minimal impact on the ILS market. The Swiss Re Cat Bond Total Return Index showed strong returns, albeit lower than those recorded in 2023, reaffirming the asset class’s attractiveness relative to other credit products.
ILS instruments, which mainly cover high-severity risks such as major hurricanes and earthquakes, facilitated approximately $440 million in recovery payments to sponsors in 2024 due to developments from previous events.
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