ILS market M&A consolidation can help attract more institutional capital: Stonybrook
The insurance-linked securities (ILS) market should become more streamlined and professionalised if mergers and acquisitions (M&A) consolidate players, which Stonybrook Capital believes can help in attracting more institutional capital to the sector.
Stonybrook Capital, a specialist strategic advisory and investment banking firm focused exclusively on the insurance and reinsurance industry, comments on trends in insurance-linked securities (ILS) in its end-of-year review and outlook for 2025.
The company highlights consolidation as a potentially developing trend, signalling an increasingly mature ILS market and more sophistication among its participants.
“The ILS management industry is seeing increased mergers and acquisitions as firms aim to enhance competitiveness, navigate growing operational demands, and attract institutional investors,” Stonybrook explained.
Operational efficiency is part of this, as too is access to capital and just as importantly access to reinsurance risk opportunities to invest in.
The company said, “Managers are pursuing acquisitions or forming strategic partnerships to enhance their capacity to offer rated reinsurance paper, which is increasingly demanded by institutional investors seeking reliable and scalable risk transfer solutions.”
Highlighting the M&A between Twelve Capital and Securis Investment Partners, Stonybrook highlighted that this deal, “exemplifies the trend of ILS managers combining resources to enhance market presence and operational efficiency.”
Adding, “The rise in mergers and acquisitions shows growing investor confidence in the ILS sector, with many seeing consolidation as a way to build stronger and more reliable investment platforms.
“We think the consolidation trend is expected to create a more streamlined and professionalized ILS market, attracting further institutional capital.
“Consolidation among ILS managers signifies the maturation of the market, as firms seek to leverage synergies, diversify offerings, and better navigate the complexities of the reinsurance landscape.”
Commenting on ILS market activity levels, Stonybrook believes the recent period of strong activity and performance can be sustained, as “The strong momentum in the ILS sector is expected to persist.”
Also read: More ILS M&A consolidation expected in the near term: LGT ILS Partners’ Paul.
