The reinsurance market continues to provide attractive conditions for underwriting and Chris Parry, the Global Head of Capital Partners at RenaissanceRe told us the company expects this to provide ongoing opportunities for ILS investors, which will help the insurance-linked securities (ILS) sector to keep growing.
Discussing how the last year has gone for the third-party capital focused division he heads up at the global reinsurance firm, Parry told us, “RenaissanceRe Capital Partners has seen strong inflows across our vehicles, reflecting confidence in our platform and the resilience of the asset class. We are unique in our ability to offer a full product range covering property and casualty and specialty utilizing both rated vehicles, private reinsurance and cat bonds.”
Market conditions are expected to remain conducive for more investor interest as well, as Parry said, “We believe the current underwriting market is attractive, and that it will persist and provide opportunities for our partners interested in the asset class.”
The insurance-linked securities (ILS) market has been evolving over the last few years, alongside a period of growth and Parry highlighted growing diversification opportunities for ILS investors.
He explained, “The market remains very healthy and primed for further growth. We have seen strong growth in both cat bonds and private reinsurance. Additionally, we have seen interesting structural trends suggesting that further growth and diversification is achievable – namely through Casualty ILS and Lloyd’s of London.
“Both structures appeal to a broader investor base outside of the traditional institutional investor and importantly share a relatively untapped source of risk through casualty and specialty.”
Adding that, “From an investor perspective, we expect to see more private equity and private credit investors supporting the asset class, further expanding the pool of investors in the future.”
Moving on to speak about what topics he thinks are going to be key parts of the ILS market conversation as we move towards the January 2026 reinsurance renewals, Parry highlighted that the key selling points of the asset class remain the same for investors.
Parry explained, “Our conversations with investors heading into the 1/1 renewal remain focused on how our partners can benefit from the non-correlation and attractive returns of the asset class. The institutional investor base remains discerning and is more knowledgeable than ever, so there is increased awareness around the timing of investments linked to the market cycle and the desire to rebalance and reallocate capital to maximize returns.
“Macroeconomic volatility, alternative sources of capital usage, and risk adjusted returns are on many of our investors’ minds and our aim is to understand their risk appetite, target returns and liquidity requirements so that we can match that with a capital efficient solution that meets their needs.”
But manager selection remains critical Parry believes, highlighting some of the consideration points that investors need to keep top of mind this year.
“Over the last two years, the market experienced a reinsurance step change in rate and stronger terms & conditions, and as a result, we have seen higher underwriting yields, higher retentions and improved risk metrics for investors in ILS. We view these improvements as immensely positive for the market as a whole. Heading into 1/1, investors need to remain confident that they are being adequately compensated for the risk that they are assuming in order for them to continue to see the value that ILS brings to their portfolios,” Parry told us.
Going on to say that, “Another key consideration for investors is the ability for managers to incorporate various views into their models including the impact of social inflation, claims practices, litigation actions, policy reforms and legislative changes – just to name a few. These considerations are not always captured in third-party models and are critical in making a valid assessment of the underlying risk.”
As we move into the towards the final quarter of the year, Parry has expansion opportunities on his mind, seeing the RenaissanceRe Capital Partners platform as offering a broad range of access points to the ILS and reinsurance asset class for potential investors.
“For RenaissanceRe, we have always been innovators of structures and continue to explore areas where we can find solutions to match risk with capital to support our cedents and investors,” Parry explained to us. Adding that, “Over the last several years we have been successful in expanding our footprint via structures like Vermeer (risk remote property cat), Fontana (focused on casualty, specialty and credit) and, more recently, our launch of Medici UCITS (adding additional support to the cat bond market).”
Read all of our interviews with ILS market and reinsurance sector professionals here.
