ILS investor base hits record size, market seeks expansion
The diversity and size of the insurance-linked securities (ILS) investor base has reached unprecedented levels, according to Cory Anger, a managing director at Marsh Securities, which operates under Marsh Re and specializes in ILS, catastrophe bonds, and private credit. Speaking in a recent interview, Anger described the current state of the ILS market as robust, driven by strong returns and sustained investor demand.
Challenges and Growth Opportunities in ILS
Anger highlighted several challenges facing the ILS market, including slower growth in reinsurance demand from traditional markets due to easing replacement cost inflation. She emphasized the importance of expanding coverage across multiple reinsurance lines and exploring new risk categories such as offshore wind farms and casualty-based structures.
“Covering multi-lines of reinsurance through whole account coverages, different types of coverage (e.g. offshore wind farms) and pioneering new ILS opportunities (e.g. casualty) is important to expanding the investment opportunities,” Anger said. Despite these hurdles, she noted that the quality of ILS structures and terms remains strong, supporting continued market health.
Investor Interest and Structural Innovation
The breadth of participation in the ILS space continues to grow, with Anger pointing out that volatility in traditional capital markets has redirected attention toward alternative investments like ILS. She added that earnings from these structures are contributing meaningfully to overall portfolio performance.
“The diversity and size of ILS investors has never been larger,” Anger explained. “While complexity of structures increases, the quality of the ILS structures and terms/conditions remains strong.”
Looking ahead, Anger expects this momentum to carry into year-end renewals, where consistency and relevance will guide discussions between ILS managers and investors or cedents. She observed that the sector has historically adapted more quickly than traditional reinsurance during softening cycles, helping sustain growth.
Emerging Peril Classes and New Frontiers
In recent years, the ILS market has broadened its scope to include risks such as cyber, casualty, and specialty lines, areas where investor appetite remains high. Anger noted that while some segments like cyber and casualty have experienced rate softening, diversification into new business lines has helped maintain return expectations.
“We continue to see the market expand and deepen its support of new lines for ILS structures,” Anger said. “We have not seen abatement in interest for casualty or whole account sidecars.”
She also mentioned growing interest from investors willing to engage with these opportunities without relying on less liquid strategies such as private credit.
Expanding Investment Opportunities and Market Differentiation
As the industry moves into year-end renewal negotiations, Anger emphasized that consistency and relevance are key topics for ILS markets and alternative capital managers to discuss with investors and cedents. The ILS market has expanded into emerging perils such as casualty, specialty, and cyber in recent years, with Anger outlining expectations for where these lines are heading next. Artificial intelligence has become a key topic across reinsurance and ILS markets, as data center buildouts continue to take shape.
Anger expects 2027 to be a key year for AI integration across the ILS market. She noted that ILS will play a role in insurance facilities and exchanges for data center insurance being implemented, with investors raising capital for these opportunities. Marsh Securities aims to differentiate its business by working collaboratively with Marsh Re traditional broking teams to design cohesive placement strategies, focusing on novel ILS structures tailored to sponsor needs through 2026 and 2027.
Artificial Intelligence and Future Outlook
“Marsh Securities (along with the rest of Marsh) has been focused on how artificial intelligence can play a role in the industry and more specifically ILS,” Anger told Artemis. “We led a panel on the topic at the ILS industry’s SIFMA conference in April 2026.”
