ILS Capital Hits $144.5bn, Now
Insurance-linked securities capital has grown to $144.5 billion and is now considered foundational to the global reinsurance market, according to a report
Insurance-linked securities capital has reached $144.5 billion and is now described as "foundational" within the global reinsurance market. The estimate comes from Aon Securities, the investment banking unit of Aon, and represents a $3.5 billion increase from the first quarter of 2026.
Richard Pennay, CEO of Aon Securities, stated that the past year marked an important milestone. "The past 12 months marked an important milestone for the ILS market as it continued to evolve into a source of foundational reinsurance capital for clients globally," Pennay explained. He added that the expanding market provides clients with a source of durable capital while attracting investor interest.
Market Growth and Structure
The report highlights the continued growth of catastrophe bonds and the broader ILS sector. At the end of the first quarter of 2026, Aon had estimated alternative capital in reinsurance at $141 billion, a 4% growth since the end of 2025. The figure then rose to $144.5 billion by June 30th, 2026, representing roughly 2.5% growth in the second quarter.
While the quarterly growth rate slowed, Aon noted that record-high catastrophe bond issuance occurred alongside meaningful early maturities, which freed capital for reinvestment. The compound annual growth rate for this alternative capital over the last five years stands at 8.3%.
Expansion Across Insurance Lines
The ILS market now spans all property and casualty insurance lines. This expansion is driven by the development of new structures, such as asset-intensive sidecar transactions. These sidecars, which can feature casualty lines or whole-account structures, have been executed on behalf of both insurers and reinsurers with some of the world's largest investors.
Pennay noted the market's ongoing innovation. "While the market has matured in the past 20 years of Aon producing this report, the pace of innovation remains as fast as ever," he stated.
Comparative Growth Rates
The source provides specific compound annual growth rates for different segments of the alternative capital market over distinct periods.
| Market Segment | Time Period | Compound Annual Growth Rate (CAGR) |
|---|---|---|
| Overall Alternative / ILS Capital | Last 5 years | 8.3% |
| Catastrophe Bond Market | Last decade | 11.6% |
This growth has cemented the catastrophe bond's role as foundational to many cedent reinsurance towers in recent years. The expansion of ILS capital into non-catastrophe risks promises to do the same for other lines of business.
Looking ahead, Pennay concluded that the ILS market outlook remains constructive. He said clients are expected to continue seeking efficient, diversified, and multi-year capital across a wider range of risks and products. Investors, meanwhile, remain focused on disciplined underwriting, transparency, and competitive risk compensation. Pennay anticipates considerable focus on asset-driven sidecar structures as the market proceeds towards 2027.
