ILS Market Reaches Record $107 Billion Capacity in 2024

Retained earnings and capital inflows propelled the insurance-linked securities (ILS) market to a record $107 billion in capacity at year-end 2024, according to a new report from AM Best and Guy Carpenter. The report credits the growth to strong returns and 2 consecutive years without significant catastrophe losses.

Catastrophe bonds led the expansion, with the 144A natural catastrophe bond market surpassing $45 billion by the end of 2024. Matt Tuite, director-ILS at AM Best, said, "ILS managers believe that the strong returns in the cat bond segment may intensify the appetite of investors for other forms of ILS."

The report highlights that cat bonds often act as a gateway for investors into the broader ILS market. Other areas also posted notable figures as follows.

• Sidecar capacity was estimated between $8 billion and $10 billion.
• Industry loss warranty capacity remained steady, ranging from $5 billion to $7 billion.
• Collateralized reinsurance capacity reached between $45 billion and $50 billion, with expectations for further growth after 2 solid years of investor returns.

The abundance of property catastrophe capacity at the January 1, 2025, renewals resulted in overall risk-adjusted rate reductions. The Guy Carpenter Global Property Catastrophe Rate-on-Line Index declined by 6.6 percent at the January 2025 renewals, contrasting with an increase of nearly 30 percent 2 years prior during a period of high demand and limited 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 percent to 20 percent range," Wai Tang, senior director-ILS at AM Best, said. "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."

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