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Capital markets deepen ties with reinsurance amid ILS growth
Marsh Re executives project dedicated reinsurance capital could reach a record USD 705 billion by year-end 2026, driven by both traditional and alternative capital allocations.
Marsh Re executives say the role of the capital markets in reinsurance is shifting from a temporary funding source to a more permanent presence. Speaking at the run-up to the 68th annual meeting of the industry in Monte Carlo later this week, Laurent Rousseau, CEO of Global Capital and Advisory and Europe and IMEA at Marsh Re, said capital is increasingly allocated to the reinsurance sector, helping make capital markets “no longer a visitor” but “now a resident.”
Rousseau pointed to growth expectations for the insurance-linked securities market and broader reinsurance capital. He cited a projected rise in dedicated reinsurance capital to a record USD 705 billion at year-end 2026, with new records of USD 575 billion for traditional capital and USD 130 billion for alternative capital.
While Rousseau described the trend as positive, he also emphasized the need for investors to understand reinsurance and ILS risk more fully. He warned that capital markets can be volatile and said many investors are still learning insurance-linked securities, arguing that they must also grasp the true nature of insurance and reinsurance risk, including how claims develop and are adjusted.
Looking ahead, Rousseau said durable competitive advantage will likely come from reinsurance companies that know how to partner with the capital markets and make that partnership part of their value proposition. He added that the ILS universe offers cedents choice, including regarding the source of capacity and terms.