ILS market insights: August 2024

The first half of 2024 has been a period of both challenge and resilience for the global economy and the Insurance-Linked Securities (ILS) market. Inflationary pressures from 2023 have begun to ease, and central banks worldwide have adopted a wide range of monetary policies. The global geopolitical environment remains unstable with key elections in France, the UK, and the US, and ongoing conflicts in Israel and Ukraine. In 2024, significant natural catastrophes have occurred, such as several destructive severe convective storms in the US and earthquakes in Japan and Taiwan. Despite these events, the cat bond market demonstrated low volatility, with minimal impact observed to outstanding bonds. 

The ILS primary market saw record issuances in the first half of 2024, continuing the growth trend from 2023. This period saw over USD 12.3bn of primary issuances across 49 transactions, driven by robust investor demand and an excess of capital. The secondary market experienced record high trading volumes and spread fluctuations, particularly in industry loss trigger notes. 

The Swiss Re cat bond indices reflected the ongoing attractiveness of the cat bond market, demonstrating strong returns and indicating sustained investor confidence. As we move forward, the ILS market remains an attractive relative value option, offering diversifying opportunities for investors and sponsors alike.