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Private ILS could broaden diversification beyond public catastrophe bonds

Twelve Securis’ CIO says combining liquid cat bonds with private ILS may expand pricing options and diversification, despite private structures typically offering less liquidity.

Reported · Written up by our desk · Reinsurance

Catastrophe bonds are a mature institutional asset class, but they still represent only a portion of the broader insurance-linked securities, or ILS, market, according to Artemis.

Speaking ahead of the outlet’s Q2 2026 catastrophe bond and related ILS market report, Cahal Doris, CIO of Private ILS at Twelve Securis, argued that investors focused only on public cat bonds may miss diversification sources and relative value opportunities available in private ILS.

Doris said accessing both public and private ILS could broaden the opportunity set, although private ILS typically comes with reduced liquidity and can carry underwriting risk. He noted that the generally short-duration nature of many private ILS strategies may help investors seek enhanced risk-adjusted returns without the multi-year capital lock-ups common in other private market approaches.

The executive also pointed to parts of the ILS market beyond securitised cat bonds, including privately negotiated reinsurance transactions, retrocession contracts, and parametric structures, which can give investors access to different risks, counterparties, and transaction formats. Doris added that cat bond and reinsurance markets can have different supply and demand dynamics, renewal cycles, and participant behavior, affecting pricing mechanisms.

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