Protracted supportive market for ILS investors in 2024: Sangiorgio, Twelve Capital

The insurance-linked securities (ILS) market is expected to remain supportive of investors in 2024, according to Twelve Capital’s Head of Investment Solutions Vittorio Sangiorgio.

Sangiorgio stepped into his new role as Head of Investment Solutions at Twelve Capital, the Zurich headquartered insurance-linked securities (ILS) and reinsurance investment manager, this month having been at the company for almost four years.

Sharing his insights into the current dynamics of the ILS market, Sangiorgio believes that the recently completed reinsurance renewals show that conditions are going to remain supportive of investors desire for returns.

He said to expect a “protracted supportive market for ILS investors in 2024,” explaining that the recent renewals, which saw flat to low single-digit price increases for property risks, also saw the market exhibit “continued underwriting discipline.”

“A disciplined reinsurance renewal season is fundamental for ILS investors as, to varying degrees, Cat Bond spreads and Private ILS spreads are linked to the state of the broader reinsurance cycle,” he explained.

For 2024, Sangiorgio anticipates a continuation of the strong primary issuance market in catastrophe bonds and more broadly in ILS.

“A healthy primary market increases the depth of the market,” he said, going on to highlight that at Twelve Capital “We expect the overall ILS market to grow at high-single-digit pace from the current ~USD 100bn in the next years.”

He went on to explain that catastrophe bond issuance is expected to be above average again, saying that this “Growth will enable portfolio diversification and contribute to healthy secondary market opportunities.”

But he also cautioned that secondary perils remain a source of uncertainty for 2024 and that at Twelve Capital the focus on peak perils is set to continue.