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ILS managers emphasize diversification as 2026 hurricane outlook shifts
SCOR Investment Partners expects the 2026 Atlantic hurricane season to be significantly quieter than normal, with activity projected below recent years and long-term averages.
SCOR Investment Partners, the asset management arm of French reinsurance group SCOR, said its insurance-linked securities portfolios are staying focused on diversification and resilience despite forecasts that the 2026 Atlantic hurricane season could be more favorable than recent years.
In its report on potential implications for the ILS market, the firm projects the season will be significantly quieter than normal, with activity expected to run well below both recent years and long-term averages. It attributes the outlook primarily to El Niño conditions developing over the summer, sea surface temperatures, and Saharan dust.
SCOR Investment Partners said estimates point to a transition from a weak El Niño in early summer to a strong to very strong event by August to October, aligning with the hurricane peak. The manager also linked the change to a likely increase in vertical wind shear and a reduction in available moisture over the Atlantic, factors it said are critical for inhibiting storm development and intensification.
The firm added that the expected El Niño-driven warming of the Pacific could produce conditions that exceed those seen during the previous strong event in 2015 and may rank among the most pronounced episodes since 1950, reinforcing its emphasis on maintaining a high shock-absorption capacity in portfolio construction.