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Global reinsurance capital outpaced demand at the 2025 mid-year renewals, fostering a more competitive environment for buyers, according to Aon. The firm also estimated that insurance-linked securities (ILS) capital remained stable at $115 billion as of the end of the first quarter, underscoring the ongoing strength and resilience of alternative capital sources.

“Coming at the start of the Atlantic hurricane season, June 1 and July 1 are key renewals for the U.S. and Latin America, as well as Australia and New Zealand. Despite an active first half for natural catastrophe losses, mid-year renewals experienced a broadly competitive environment as reinsurers, ILS markets and new entrants sought to deploy capacity and grow market share,” Aon explained in its mid-year 2025 renewals Reinsurance Market Dynamics report.

Global reinsurer capital rose by $5 billion to $720 billion in the first quarter of 2025, surpassing the previous record of $715 billion set in 2024, despite the financial impact of the California wildfires.

According to Aon, this growth was driven by strong retained earnings among established players, with two-thirds reporting double-digit annualised returns on equity.

At the same time, the catastrophe bond market posted record issuance in the first half of 2025 with the two largest transactions in the history of the market, each exceeding $1.5 billion.

In early May, Florida’s Citizens Property Insurance Corporation secured a then-record $1.525 billion of reinsurance from its Everglades Re II Ltd. (Series 2025-1) issuance.

Later on that month, State Farm then secured a record amount of reinsurance limit from the capital markets in a single visit in cat bond form, as it priced $1.55 billion of multi-peril protection via sponsorship of four Merna Re (Series 2025) cat bonds.

Moreover, Aon went on to note that reinsurance capacity was more than sufficient to absorb a near 10% increase in global demand for property catastrophe limit.

“The growth was largely driven by insurers in the U.S., influenced by significant depopulation of Florida’s windstorm insurer of last resort, Citizens. Other factors included inflation, model changes and revised views of natural catastrophe exposure, with recent wildfires in the U.S. and floods in Brazil prompting insurers to evaluate loss potential and protection needs,” the broker explained.

Furthermore, Aon estimates that equity reported by global reinsurers rose by $5 billion to $605 billion in the first quarter of 2025, continuing the recovery seen since 2022.

“The primary drivers have been strong earnings, following the market ‘reset’ in 2023, and the reversal of unrealized losses on fixed-income securities, due largely to the “pull-to-par” effect. Growth has been partly offset by increased capital returns to investors, as reinsurers look to reward loyalty,” Aon noted.

The broker added: “Alternative capital is estimated to have remained at a record high of $115 billion, with attractive market conditions encouraging existing participants to reinvest profits and new entrants to commit funds.

“Increased investor appetite is allowing many traditional reinsurers to expand their sidecar and/or catastrophe bond programs, enabling the deployment of additional capacity.”

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We’ve reported before that the giant insurance-linked securities (ILS) portfolio managed by PGGM, the Dutch pension fund investment manager, on behalf of its end-client Dutch pension PFZW, had delivered a 15.1% net of costs return for calendar year 2024, on a Euro hedged basis.

That was impressive enough, for a significant ILS investment portfolio that amounted to roughly US $8.7 billion in valuation terms at the end of last year, spanning numerous allocations to catastrophe bonds, private ILS, quota share sidecars and collateralized reinsurance, as well as the earnings generated by a sponsored rated reinsurer balance-sheet.

The PGGM ILS investment team, on behalf of PFZW, has spent years building-out a range of allocations and structures that allow the pension investor to efficiently access the returns of the reinsurance market, at the risk-return levels it desires and with the additional benefits of globally diversified exposures incorporated as drivers of returns.

As we reported in an article recently, the PGGM ILS allocation portfolio constructed on behalf of PFZW features 14 investments, across a wide range of structures and reinsurance partnerships.

This gives the investor optionality through the market-cycle, access to diversifying regions and perils, aligned partnerships, focused ILS fund manager strategies and self-managed private ILS account optionality, as well as the broad access to business and leverage that the Vermeer Re rated balance-sheet provides.

But now, in the latest annual report from the Netherlands based pension PFZW the raw performance-potential of the giant ILS and reinsurance investment portfolio has become clearer.

PFZW’s latest report for 2024 states that the gross return of the ILS and reinsurance investments amounted to an impressive 25.2%, before hedging and other costs were taken into account.

The cost of the ILS allocation is reported at just 0.5%, both on a hedged and unhedged basis, meaning the unhedged net return of the ILS portfolio came in at 24.7% for calendar year 2024.

Just as impressive is the fact the PFZW ILS and reinsurance investment portfolio outperformed its benchmark by 6.9% in 2024, both on the hedged and unhedged basis.

Which helps to drive home the value the Netherlands based pension fund derives from its investments into the ILS and reinsurance market.

While also serving to make clear the return-potential of a large and diversified ILS portfolio that has numerous access points to the reinsurance market through a variety of structures.

PGGM remains the largest single investor listed in our directory of pension funds and sovereign wealth funds investing in ILS and reinsurance.

PGGM / PFZW ILS portfolio gross return for 2024 was 25.2% unhedged was published by: www.Artemis.bm
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The specialty re/insurance market may be starting to soften, but the inflection point into a full soft market remains two to three years away, according to a new report from Peel Hunt.

This conclusion follows a series of in-depth meetings the firm’s analysts held with insurance and reinsurance underwriting management teams from key Lloyd’s market players, such as Beazley, Conduit Re, Hiscox, and Lancashire.

As part of a recent Lloyd’s market tour, Peel Hunt analysts held discussions with both insurance and reinsurance underwriters, focusing on rate adequacy, cycle management, and strategic positioning ahead of a potential downturn. Their findings suggest that while there are early indicators of softening in some lines, underwriting discipline and technical margins remain broadly intact across the market.

“We are 2-3 years away from being in the throes of a soft market, with 2025 underwriting margins still earning through the attractive rates written in 2023/24, and 2026 earning through very adequate rates written in 2025,” the analysts wrote.

The analysts also added: “All underwriters reiterated that Specialty (re)insurance rates remain adequate on average across the portfolio. However, there are a number of warning signs emerging.

“All teams we met did not dispute that Specialty (re)insurance remains a cyclical market, and that rates were likely to be on a downward trajectory from here.”

Peel Hunt also noted that the underwriters they met with suggest that the floor of the next downcycle is likely to be higher than the previous trough. According to the analysts this is primarily due to the higher-risk environment, particularly within the property catastrophe market, and lingering uncertainty around claims inflation, particularly in casualty classes.

“It is becoming harder to grow organically as the year progresses. However, there remain pockets of opportunity (eg Environmental Liability), as not all classes soften at the same pace, whilst a number of areas have already been softening for a while and at some point need to reset (eg Cyber, Aviation),” the analysts further explained.

Adding: “Property catastrophe lines remain very attractive at current rate levels, despite signs of high single-/low double-digit rate declines so far this year (Florida renewals down c.10% was not particularly disputed), whilst the broader Casualty market seems stable.”

Furthermore, Peel Hunt also highlighted that the underwriting management teams they met are better positioned to navigate the coming cycle than in prior iterations. Portfolios are more diversified, reserve buffers have been rebuilt, and there is a clear intention to actively manage capital and exposure as market conditions shift.

All carriers confirmed they would be prepared to reduce their Lloyd’s and reinsurance exposures if softening accelerates, while deploying outwards reinsurance (both quota share and excess-of-loss) to protect net margins and reduce volatility. In parallel, companies are expected to increase capital return measures, such as special dividends and share buybacks, to maintain investor discipline.

The analysts also noted that some meetings voiced concerns about the increase in broker facilities and the (smart) follow market, as well as the number of new MGAs/MGUs being created.

However, Peel Hunt stated that “so far this is not hurting rate adequacy”

Peel Hunt’s current modelling already incorporates a soft market scenario beginning this year and extending through 2028. At this stage, the rate of softening remains in line with expectations, and the analysts remain constructive on the sector’s near- and medium-term prospects.

“Meanwhile, we believe the cash and capital generation will be very attractive in the medium term, given the healthy rate adequacy we are seeing today,” the analysts concluded.

Throes of soft reinsurance market still 2–3 years away: Peel Hunt was published by: www.Artemis.bm
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Descartes Underwriting, the parametric risk transfer specialist, has announced the launch of a new fully customisable Flood-at-Location parametric flood insurance product for U.S. commercial customers.

Backed by extensive research in flood modeling and advanced sensor systems, Descartes explained that its new offering upends the traditional approach to flood insurance, aiming to deliver better protection for businesses, investors, and homeowners associations.

According to the firm, the product provides coverage for any economic losses resulting from fluvial, pluvial and coastal flooding, with limits of up to $70 million available. Descartes also explained that payment is usually received by the insured within days.

Additionally, coverage can be tailored for one or more locations, and policies can be structured with flexible durations to match project timelines or client preferences, including multi-year terms.

“Additionally, any type of business and industry class may be covered. Any economic loss sustained is insured, including property damage, business interruption, and extra expenses. No direct physical damage is required to trigger a payout,” Descartes noted.

The firm continued: “Most importantly, companies with high historical flood losses–oftentimes facing the toughest renewal conditions–gain access to a customized, stable insurance solution. Policies are available in the surplus lines market in all 50 states.”

“Flood is often excluded or sub-limited in regular property policies and therefore may require stand-alone flood coverage. Flood-at-Location from Descartes is a superb supplement to Property All Risks insurance. It provides coverage for risks which the National Flood Insurance Program (NFIP) excludes (such as docks, piers, etc.) and can be designed to respond in excess of NFIP’s $500,000 limit, with a cost-efficient structure,” Descartes further explained.

Daniel Vetter, Head of Americas for Descartes, commented: “This responsive and remarkable new product delivers unparalleled, flexible flood coverage for commercial properties. For all the reasons that conventional insurance for flood is sometimes unsatisfactory–slow claims payments, exclusions, sub-limits, or a lack of availability–this parametric product will fill the existing gap we’re seeing in the market.”

Kevin Dedieu, Co-founder and Chief Scientific Officer of Descartes, said: “This market-leading coverage follows intensive research and development conducted by Descartes in-house and with our technology partners. We developed this product because our brokers shared with us that commercial flood products available at the time did not meet their clients’ needs. We utilized our scientific approach to create this new, highly responsive product which leaves no gaps uninsured.”

Descartes expands US flood coverage with new parametric insurance offering was published by: www.Artemis.bm
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Across the entire roughly $4.49 billion reinsurance risk transfer tower of Florida’s Citizens Property Insurance Corporation the capital markets have taken their largest share proportionally in 2025, with around 87% of the total backed by catastrophe bonds, collateralized reinsurance markets and ILS fund managers.

As Artemis was first to report yesterday, Florida Citizens confirmed the successful completion of its reinsurance renewal for the 2025 hurricane season, securing the targeted traditional and catastrophe bond coverage for less than the budget that had been set.

For 2025, Florida Citizens had a target to secure $4.49 billion of total risk transfer, across cat bonds and reinsurance, with $2.89 billion of new reinsurance and/or cat bonds required, alongside the $1.6 billion of still in-force cat bond deals from prior years.

Having secured significant catastrophe bond coverage with the $1.525 billion Everglades Re II Ltd. (Series 2025-1) issuance in May, it meant $1.369 billion of newly placed risk transfer was secured in reinsurance form, from both traditional and some collateralized markets.

Now, Artemis has seen details of the breakdown of lines within the $1.369 billion of traditional reinsurance that Florida Citizens secured at the renewal and, as usual, it features meaningful additional capacity backed by capital markets investors.

The catastrophe bond market is providing $3.125 billion of reinsurance limit to support Florida Citizens for the hurricane season in 2025, which puts the insurer third in our cat bond sponsor leaderboard at this time.

But, of the $1.369 billion of traditional reinsurance limit secured at the renewal, at least 59% has been provided by collateralized markets and insurance-linked securities (ILS) fund managers.

Reinsurance companies appear to have taken almost $566 million of the Citizens placement for 2025, although it’s important to note there are names in the list that may have ceded some of that risk to their own capital market vehicles, such as Everest, PartnerRe, Ascot, Ariel Re and others.

Which means the actual proportion of the Florida Citizens traditional reinsurance placement backed by capital market investors could be higher still than the 59% we can definitely identify as collateralized or ILS backed.

Before we go into who participated on the collateralized and ILS manager side of things, let’s deal with the top-level breakdown of the Citizens tower first.

As we said, some 59% of the traditional side of Citizens reinsurance renewal has been provided by collateralized and ILS markets, with perhaps some more coming through reinsurers risk-sharing vehicles as well, albeit the latter not being identifiable.

That 59% is actually slightly down on last year’s 66% of the Florida Citizens reinsurance placement that was taken by collateralized and ILS markets.

But, with the catastrophe bond component having grown, the share taken by overall capital markets backed capacity has now increased further, from the 81% seen last year, to now 87% of the entire Florida Citizens risk transfer tower being backed by either catastrophe bonds, fully-collateralized reinsurance markets, or ILS fund managers.

That drives home the importance of the ILS market for insurers with significant property catastrophe exposure in 2025, as well as the fact ILS backed capacity has proven very efficient this year.

Looking into the final lines across the Florida Citizens property catastrophe excess of loss reinsurance layers that were placed at the mid-year 2025 renewals, many of the typical names we’ve seen in previous years continue to feature.

At just over $360 million, the largest of the capital markets backed participants in Citizens reinsurance placement was ILS manager Nephila Capital, with $10 million secured through its Lloyd’s syndicate 2357 and $350 million through Markel Bermuda, all sourced via Nephila’s Nautical Management Ltd. entity.

In fact, Nephila Capital is again the largest line in the Citizens program, far bigger than any of the traditional reinsurers that participated.

After Nephila, on the collateralized and ILS side, is Aeolus Capital Management, which took just over $155 million spread across two segregated accounts of its Keystone strategy, as well as some limit placed via Hannover Re fronting.

The next largest participant at Citizens reinsurance renewal was hedge fund D. E. Shaw who took almost $139 million of the tower, all underwritten through cells of D. E. Shaw Re in Bermuda.

Bermuda based ILS fund manager Pillar Capital Management took almost $66 million of the placement, also written on paper provided by global reinsurance firm Hannover Re.

LGT ILS Partners was next, underwriting almost $31.5 million of the tower via its rated reinsurer Lumen Re in Bermuda.

Alternative investment manager Quantedge Capital took an almost $21.2 million share via two lines written with fronting support from Arch Re and Hannover Re.

Investor One William Street Capital took a $15 million line fronted by a cell of Artex’s Axcell Re structure.

ILS manager Leadenhall Capital Partners took a nearly $14.5 million reinsurance line, fronted via its relationship with reinsurer Nectaris Re Ltd.

Lastly, Eskatos Capital Management took an almost $1.14 million line, fronted on Hannover Re paper.

The only ILS type market missing this year, that participated in 2024, is Stone Ridge Asset Management.

The majority of participations in the tower are down year-on-year, except for LGT ILS Partners, Quantedge and One William Street Capital, all of who took a slightly larger line in 2025.

The collateralized, cat bond and ILS manager markets have stepped up their support of Florida Citizens, in proportional terms of their share of the overall risk transfer and reinsurance program in 2025, clearly demonstrating that Citizens felt the capital markets offered real value this year leading it to place more of its renewal needs with ILS style capacity.

Other notable participants, from the traditional side of the reinsurance market, include Swiss Re taking a $94 million line, Everest Re $86.5 million, Odyssey Re taking $71.2 million, Munich Re taking $67.9 million, Ariel Re taking $62.3 million, TransRe taking $73.9 million, PartnerRe just over $52.7 million, Ascot close to $20 million and MAP syndicate just over $17 million.

A number of these have dedicated third-party capital partnership vehicles and structures, or have specific backing from other semi-independent ILS fund managers, so as we said we suspect more of the risk will ultimately end up backed by the capital markets from the Florida Citizens reinsurance tower for 2025.

But, even without that information, the key role cat bond, ILS and collateralized markets play for Citizens, for Florida and for peak zone natural catastrophe peril reinsurance is driven home by the significant percentage of this overall risk transfer tower that resides in the capital markets, rather than on traditional reinsurance balance-sheets.

Read about every one of Florida Citizens catastrophe bonds in our extensive Deal Directory.

Read all of our reinsurance renewal news coverage.

Cat bonds, collateralized and ILS managers took 87% of Florida Citizens tower in 2025 was published by: www.Artemis.bm
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Insurance solutions provider Orion180 has increased its reinsurance tower by 31% year-over-year, reaching $845 million of limit for the 2025 hurricane season. The completed placement includes both excess-of-loss (XOL) and net quota share agreements, reflecting the company’s continued growth in high-risk, catastrophe-exposed markets.

The renewed reinsurance program, which covers Orion180 Insurance and Orion180 Select Insurance companies, is backed by a panel of 35 global reinsurers.

With the National Oceanic and Atmospheric Administration (NOAA) forecasting an above-normal hurricane season, predicting 13 to 19 total named storms, Orion180 has secured the reinsurance placements to back its expanding personal lines portfolio across the U.S. including its FLEX Home Insurance and Residential Private Flood Insurance offerings.

Ken Gregg, President and CEO, commented: “By providing additional insurance capacity, our reinsurance partners empower us to deliver much-needed tailored coverage to homeowners in catastrophe-prone markets.

“Independent agents and customers can rest easy, knowing that Orion180 can fulfill its promise of offering protection in higher risk areas of the United States when few others will,” he added.

To further reinforce that commitment, Orion180 emphasises that, “Every reinsurance partner of Orion180 meets or exceeds the “A-” rating standard set by A.M. Best or is fully collateralized. This guarantees our claims-paying ability, ensuring coverage even in the event of major disasters.”

With the 2025 Atlantic hurricane season now underway, Bernhard Allgäuer, Senior Investment Strategist at VP Bank, recently outlined why insurance-linked securities (ILS) investors have reason to be optimistic heading into this years season, citing elevated risk premia and a favourable technical setup that could support returns.

Orion180 grows reinsurance coverage 31% to $845m for 2025 hurricane season was published by: www.Artemis.bm
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Florida’s Citizens Property Insurance Corporation has confirmed that it has successfully completed its reinsurance renewal for the 2025 hurricane season, securing the targeted traditional and catastrophe bond coverage for less than the budget that had been set.

Recall that, for 2025, Florida Citizens had a target to secure $4.49 billion of total risk transfer, across cat bonds and reinsurance, with $2.89 billion of new reinsurance and/or cat bonds required, alongside the $1.6 billion of still in-force cat bond deals from prior years.

Citizens staff aimed to secure the proposed risk transfer, reinsurance and cat bond tower for 2025 with budgeted premiums of up to $550 million, an amount approved by its Board.

Now, Florida Citizens has revealed that it secured all of its targeted reinsurance protection, across both traditional and alternative capital sources, for less than that budget it had set.

Citizens explained, “Thanks to favorable market conditions, Citizens was able to place its target risk transfer program of $4.49 billion which includes $2.89 billion of new placement and $1.60 billion of multi-year coverage from 2023 and 2024; at a gross rate-on-line (ROL) of 11.89%, a net ROL of 11.74%, and total cost of approximately $530.6 million.”

$1.369 billion of newly placed risk transfer was secured in reinsurance form, from both traditional and some collateralized markets.

While the remaining $1.525 billion of new placement came from Citizens latest catastrophe bond, the Everglades Re II Ltd. (Series 2025-1) issuance that was finalised in May.

That cat bond came to market with a significant initial target to secure $975 million of fully-collateralized and multi-year reinsurance protection against named storm and hurricane risks in Florida.

Thanks to strong investor demand and attractive pricing that came in in the lower-half and mid-point of guidance, depending on the tranche of notes offered, Florida Citizens eventually upsized the issuance by 56% to provide the $1.525 billion slice of its reinsurance tower.

As we reported last week, Citizens CFO Jennifer Montero explained in an Artemis Live webinar that investor appetite and pricing in the capital markets was “very positive” and as a result of sponsoring its largest cat bond ever, some 70% of Citizen’s overall reinsurance and risk transfer tower is now provided by the catastrophe bond market.

Impressively, Citizens has revealed that, for the newly placed components of the 2025 risk transfer program, the net rate-on-line (ROL) is 11.95%, which it noted is 13.5% lower than the net ROL was for the 2024 program at the time of its placement, which was 13.81%.

“The 2025 risk transfer program incorporates strategic elements from prior risk transfer programs, which include: transferring risk alongside the FHCF and transferring single occurrence and annual aggregate risk to protect a portion of surplus for most catastrophic events and thereby eliminates the probability of emergency assessments for a 1-in-100-year-year event to the citizens of Florida and reduces the probability of a Citizens’ policyholders surcharge to a 1-in-96-year return time,” Citizens further explained.

Citizens also stated, “The 2025 risk adjusted price reflects substantial improvement in market conditions. For coverage placed in 2025, the price is approximately 13.5% lower than it would have cost for similar coverage in 2024.”

Read about every one of Florida Citizens catastrophe bonds in our extensive Deal Directory.

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Florida Citizens 2025 reinsurance and cat bond renewal comes in under budget was published by: www.Artemis.bm
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Kingstone Companies, the New York and northeast US focused insurance group, has increased its catastrophe reinsurance limit by 57% at its renewal, securing a $440 million tower for 2025, with its recently completed debut 1886 Re Ltd. (Series 2025-1) catastrophe bond assisting in this expansion of core protection.

A year ago, Kingstone Companies renewed its core catastrophe reinsurance tower to provide it with $275 million of cover.

For the 2025 treaty year, Kingstone has secured $440 million in catastrophe reinsurance limit, a roughly 57% increase in protection to run from July 1st 2025 for one year.

The insurer’s first catastrophe bond provides a valuable source of multi-year protection though, helping Kingstone achieve greater certainty for future renewals, as well as locking in efficient capital markets protection.

Recall that, the 1886 Re 2025-1 catastrophe bond was priced to secure subsidiary Kingstone Insurance Company a 25% upsized $125 million multi-year source of fully-collateralized named storm reinsurance protection from the capital markets.

Meryl Golden, President and CEO of Kingstone Companies Inc. said at the time of the cat bond settling that the venture enhanced the firm’s access to efficient, diversified capital and also helped manage its costs of reinsurance protection.

Now, in commenting on the Kingstone Companies reinsurance renewal, Golden stated, “I am pleased to announce the successful completion of our 2025/2026 catastrophe reinsurance placement with favorable economic terms. In response to the significant growth in premium and exposure experienced in the past year, we increased our catastrophe reinsurance limit by 57%, or $160 million, to $440 million. The limit includes multi-year protection of $125 million sourced through the issuance of our first catastrophe bond, 1886 Re Ltd., as announced in May.

“We achieved this enhanced protection with only a 10% increase to our overall cost. The catastrophe program cost is approximately 12% of projected direct premiums earned, down from 13% for the previous treaty period. Additionally, the total cost for catastrophe coverage was below our expectations and savings will positively impact our projected diluted EPS by $0.11 for the initial six months of the treaty (i.e., July 1, 2025 to December 31, 2025). Comparable savings benefits will be seen for the remainder of the treaty as well.

“We appreciate the broad support from our valued reinsurance partners, with over 25 reinsurers participating in the program. Their continued confidence underscores the quality of our underwriting and our disciplined approach to risk management. With our reinsurance placement now successfully completed, we are well-positioned to continue our profitable growth strategy and deliver sustainable long-term value to our shareholders.”

Kingstone had priced its debut catastrophe bond within the lower-half of guidance, while achieving a larger than initially targeted size for the deal.

The 1886 Re cat bond protection now runs for four years to the end of June 2029, providing Kingstone with locked-in reinsurance and pricing certainty for that chunk of its now larger reinsurance tower.

You can read all about this new 1886 Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond deal in the extensive Artemis Deal Directory.

Read all of our reinsurance renewal news coverage.

Kingstone grows catastrophe reinsurance 57% to $440m for 2025. Debut cat bond assists was published by: www.Artemis.bm
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While the reinsurance market and its pricing would be expected to re-firm after any large hurricane losses suffered during the 2025 season, it is not expected to drive a severe market hardening as was seen after 2022, according to analysts at investment bank Jefferies.

The reason being the strong capitalisation of the global reinsurance market and insurance-linked securities (ILS), while the renewed interest in Florida risks after the legislative reforms is also seen as another potential moderator of reinsurance price firming this year.

While early forecasts for the 2025 Atlantic hurricane season suggest a year with activity levels just above the historical averages, the analysts from Jefferies suggest that, for stock pickers, a “hurricane trade” on insurance and reinsurance equities may not be as straightforward as in some other years.

The Jefferies analyst team explains, “The success of a hurricane trade and stock performance of coverage names within days of landfall depends on the timing, path, and magnitude of storms, but buying shares of hurricane-exposed reinsurers and brokers for a short-term trade at/near US landfall of a major storm offers the most upside.”

But they also note that, “The greater the expected ensuing pricing power, the stronger the share performance.”

Pricing power may not be as significant in 2025 and 2026, given the strong capitalisation of the reinsurance sector, including ILS capital, as well as the strong growth of the catastrophe bond market, the analyst report suggests.

The analysts state, “We note that the 2025 hurricane season comes three years after +$50bn industry loss Hurricane Ian hit, which drove the hard Property CAT reinsurance market in 2023, followed by moderation in 2024.

“Large hurricane losses this year could lead to some re-firming of price, but we would not anticipate a wide-spread severe hardening similar to Jan ’23 given 1) carrier retained earnings growth over last two years, 2) ILS funds beginning to pivot to growth, 3) ample ILS CAT bond capacity, and 4) FL market reforms driving renewed interest.”

While the analysts also state that a benign hurricane season would likely benefit a primary insurer trade, over one focused on reinsurers.

On the appetites of investors to allocate more to collateralized reinsurance, the Jefferies team believe this is still in a mix of wait-and-see or recovery mode at this time.

They explained, “Mostly limited appetite of third party capital is likely to continue at least until after the conclusion of hurricane season, lending more credibility to adequate catastrophe pricing being sustainable through YE25 even with 2024’s hurricane season resulting in low insured losses (though total US insured losses was ~$110bn).

“While overall ILS outstanding was 5% higher YoY at YE24, the main area seeing increased investment is catastrophe bonds which are more geared to remote risks.

“Collateralized reinsurance and sidecar capital (both of which protect against less remote risk than CAT bonds and experienced weaker returns prior 2023) growth has been more muted, but interest and capital flows are beginning to see some signs of improvement.”

However, despite ILS capital not building especially significantly, outside of catastrophe bonds, combined with the well-capitalised nature of the global reinsurance industry as a whole, it seems the Jefferies analysts believe there is sufficient capital around to moderate any hurricane-driven hardening that storms this season may cause, absent a more significant event that dents sector capital as a whole.

Hurricane losses in 2025 could re-firm reinsurance, but not as much as post-2022: Jefferies was published by: www.Artemis.bm
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The target allocation range has been reduced for an investment into a Munich Re reinsurance sidecar that features in the insurance-linked securities (ILS) portfolio managed by PGGM, the Dutch pension fund investment manager, on behalf of its end-client Dutch pension PFZW.

PGGM has been investing in the Leo Re quota share sidecar structure that is managed by reinsurance giant Munich Re since 2016, on behalf of the PFZW pension.

The Leo Re sidecar is a natural catastrophe focused structure, that allows PFZW to partner with Munich Re and share in the risks and returns of its nat cat underwriting on a global basis.

PFZW, the pension that funds the investments into insurance-linked securities (ILS) that are managed by the PGGM team, discloses target allocation ranges for each of its ILS investments and at the latest update it is only the Munich Re sidecar that has been adjusted.

The target allocation range for the Leo Re sidecar investment had sat at between EUR 250 million and EUR 500 million through 2022 and 2023, into early 2024.

Then, as we reported last year, at the middle of 2024 the target investment allocation range for Munich Re’s Leo Re sidecar vehicle was doubled to between EUR 500 million and EUR 1 billion.

Now, as of the end of the first-quarter of 2025, the target allocation range for the Leo Re sidecar investment has been halved again, back to the prior from EUR 250 million and as much as EUR 500 million.

Of course, this doesn’t necessarily mean the actual investment made into Munich Re’s sidecar has shrunk by half. It just means it likely now falls into the lower range again, with a downsizing that may just be slight in 2025.

There are, of course, a number of possible reasons for this change to the target allocation size range.

It could be due to the fact PGGM has built-out a broad range of catastrophe bond, ILS fund and direct reinsurance partnership investment opportunities over the years, allowing it to flex its allocations across structures to suit itself and the partners it works with.

PGGM has been growing its RenaissanceRe managed rated reinsurer Vermeer Re in recent years, as well as building out is Nightingale Re private mandate vehicle, while it has also recently begun to allocate to a new quota share structure named Scenery Re which is managed by Everest specialist unit Mt. Logan Capital Management, Ltd. (MLCM). So the pension investor has plenty of options available to it.

With the reinsurance market softening at this time, it’s also possible that Munich Re could have shrunk its sidecar slightly for 2025, opting to retain a little more of the economics of the property catastrophe reinsurance underwriting and hence the allocation falling below the bottom of the range that had been in place.

In addition, sidecar sponsors and investors work together to identify optimal allocations, to suit both parties risk appetites, so allocations are rarely the same year-over-year.

The reduction in the allocation range to the Leo Re sidecar is the first change to PFZW’s ILS allocation target allowances since June 2024, except for the addition of the Mt. Logan managed Scenery Re investment, although it’s worth noting that investment is still not disclosed by PFZW at this time.

Recall that, the insurance-linked securities (ILS) and reinsurance investments portfolio of Dutch pension PFZW, which is managed by pension investment firm PGGM, delivered a 15.1% return for full-year 2024.

While, the latest figure for assets under management, of what continues to be the largest single investor ILS allocation in the market, was for around the US $8.68 billion level as of December 31st 2024.

So the allocation remains significant and we suspect this change is simply due to the Munich Re sidecar investment shrinking a little, as both sponsor and investor of Leo Re flex their use of capital, appetite for risk and the partnership size changes as a result.

PFZW has a broad range of allocations to ILS funds, reinsurance sidecars and other joint-venture vehicles in the reinsurance market and at the latest update from the pension the allocation target ranges stand at the levels below, as of March 31st 2025, with only the Leo Re numbers having changed:

• Fermat Capital Management. Managed account. Catastrophe bond allocation. Target: EUR 1bn – 2.5bn.
• Nephila Capital. Tyche Catastrophe Fund. Private contracts. Target: EUR 500m – 1bn.
• Elementum Advisors. Theia Catastrophe Fund. Private contracts Target: EUR 250m – 500m.
• AlphaCat Managers. Soteria Fund. Private contracts. Target: EUR 50m – 250m.
• Munich Re. Leo Re. Private contracts. Target: EUR 250m – 500m.
• AXA XL ILS. Daedalus I Fund. Private contracts. Target: EUR 500m – 1bn.
• RenaissanceRe. Vermeer Re. Private contracts. Target: EUR 1bn – 2.5bn.
• PartnerRe. Huygens. Private contracts. Target: EUR 50m – 250m.
• Swiss Re. Viaduct Re. Private contracts. Target: EUR 500m – 1bn.
• SCOR. Concordia Re. Private contracts. Target: EUR 50m – 250m.
• Aeolus Capital Management. Spire PF Fund. Target: EUR 250m – 500m.
• Nightingale Re. Private contracts. Target: EUR 250m – 500m.
• Integral ILS. Riemann Fund. Private contracts. Target: EUR 50m – 250m.

As stated, the Scenery Re investment, which we understood to be around US $200 million in size, has not been disclosed in the latest update from PFZW.

PGGM remains the largest single investor listed in our directory of pension funds and sovereign wealth funds investing in ILS and reinsurance.

PGGM / PFZW ILS allocation range reduced for Munich Re sidecar Leo Re was published by: www.Artemis.bm
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