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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Best’s Special Report: ILS Market Posts Stellar Returns Yet Again in 2024

Retained earnings and new capital inflows helped drive the estimated capacity level in the insurance-linked securities (ILS) segment to a record USD 107 billion at year-end 2024, according to a new AM Best report.

The estimate was arrived at jointly between AM Best and Guy Carpenter, with the Best’s Special Report noting that the total was helped along by two consecutive years in which the ILS segment did not incur any material catastrophe losses. Catastrophe bonds again saw the greatest growth. By year-end 2024, capacity in the 144A natural catastrophe bond market hit more than USD 45 billion.

“ILS managers believe that the strong returns in the cat bond segment may intensify the appetite of investors for other forms of ILS,” said Matt Tuite, director-ILS, AM Best.

The report also references that catastrophe bonds serve as an entry point to the broader ILS market, and cited growth in other respective areas:

  • Capacity increased in the sidecar space and is estimated to range between USD 8 billion to USD 10 billion;
  • Industry loss warranty capacity remained flat, and was estimated at between USD 5 billion and USD 7 billion;
  • Collateralized reinsurance capacity is estimated to be in the USD 45 billion to USD 50 billion range, with ILS managers hoping for growth in this segment following two solid years of investor returns.

Property catastrophe capacity exceeded demand at the Jan. 1, 2025, renewals, leading to overall risk-adjusted rate decreases. The report also references the Guy Carpenter Global Property Catastrophe Rate-on-Line Index, which reflects the result of the capacity supply and demand dynamics at January 1. That index fell by 6.6% at the January 2025 renewals, in contrast to an increase approaching 30% two years ago, a time of soaring demand and muted supply.

“Retro capacity was widely available, coming off another essentially loss-free year, so those deals tended to see larger rate decreases, in the 10% to 20% range,” said Wai Tang, senior director-ILS, AM Best. “Capacity was also plentiful in the upper layers of reinsurance towers typically covered by cat bonds, a trend signaled in the pricing and sizing of cat bond deals during 2024.”

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=352216.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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