The insurance-linked securities (ILS) market has reached a healthier equilibrium, but it is essential to preserve the balance between ensuring cedents are robustly supported and investors are appropriately awarded for putting their capital at risk, Luca Albertini, CEO of Leadenhall Capital Partners told Artemis.Speaking to Artemis around the 2025 Monte Carlo Rendez-Vous de Septembre (RVS) reinsurance industry event, the Leadenhall Capital Partners CEO highlighted that the ILS market is fundamentally in a strong place.But he also noted the importance of maintaining discipline and continuing to recognise the importance of meeting the needs of both types of clients, protection buyers and investors.Luca Albertini told us that for the end of 2025 renewal negotiations and capital raising discussions, ensuring both sides are well-served is critical for the ILS market.

“The most important talking points will be about maintaining a core underwriting discipline even when capacity is returning to the market.The ILS market has reached a healthier equilibrium, one where cedents are robustly supported and investors are rewarded appropriately for their risk capital.Preserving this balance is essential,” Albertini explained.

He continued, “Most investors are highly sophisticated, deeply experienced and will hold us to account for underwriting choices.A return to the practices (both for the traditional as well as the ILS market) that previously led to significant investor losses would risk capital flight or de-risking, ultimately harming cedents and depress the industry growth potential.“The last few years have shown that cedents with aggressive renewal behaviour are often the first to be dropped by quality reinsurers and ILS Funds when demand exceeds supply.

This dynamic will likely repeat after the next major event, reinforcing the need for mutual discipline and long-term partnership.” Turning to the fundamentals of the insurance-linked securities (ILS) market, Albertini believes there is a lot to be positive about after some years of hard work in the market on improving structures, terms and investment strategies.“The ILS market is in a strong and improving position.Trapped capital is being released, which is restoring investor confidence in the sector.

In addition, innovative structures are reducing capital drag and improving liquidity,” he explained.“At the same time, the investor base is increasingly diversified and sticky, with long-term commitments from institutional allocators.All of which sets the stage for sustainable growth and deeper market integration.” Turning to the private ILS market, Albertini believes this is an area where significant improvements have been made, but the market still awaits a meaningful test of these.

Albertini explained that, “Private ILS has made great strides in structural efficiency, especially around post-event portfolio management.New solutions are in place to allow a smoother management of the portfolio particularly after large events.“However, these innovations remain untested in real-world stress scenarios.

The next major event will be a proving ground separating robust solutions from marketing narratives.” The Leadenhall Capital Partners CEO went on to highlight that enhancements in the ILS sector continue to be made, with technology improvements and efficiency one particular area of focus for his firm.“It is essential for any firm operating in today’s market, where technological advances and new solutions emerge almost daily, to constantly monitor developments that can enhance analytics, processes, and overall efficiency.We place a strong emphasis on evaluating these tools carefully and integrating them where they provide tangible value,” Albertini said during our interview.

“That said, the speed and complexity of technological evolution create new challenges, particularly around validating the robustness of outputs.As we adopt more sophisticated tools, our teams are committed to meticulously testing and verifying their performance to ensure that decision-making remains sound and well-supported.” We moved on to discuss investor sentiment and appetites for ILS and reinsurance investments and Albertini feels the industry is well-positioned “Investors remain highly attentive to the ongoing geopolitical environment, which continues to create uncertainty across traditional asset classes.Against this backdrop, insurance-linked securities (ILS) represent a compelling and increasingly resilient investment opportunity,” Albertini said.

Adding that, “Thanks to the diligent efforts of the ILS community, as well as investment consultants and intermediaries, much of the groundwork required to attract new capital inflows has already been laid.“The asset class has demonstrated continued strong performance, with ILS funds providing diversification and uncorrelated returns that are especially attractive in times of broader market turbulence.Robust reinsurance market conditions, characterised by disciplined underwriting and improved pricing, further underpin the sector’s growth potential.

Additionally, ongoing market volatility and expectations of a lower interest rate environment position ILS as a compelling alternative source of yield for institutional investors seeking stability and risk-adjusted returns.” All of which leads Albertini to have a positive outlook, as he explained that, “Taken together, these dynamics provide meaningful tailwinds for the ILS industry in the months ahead, reinforcing its role as a strategic allocation for sophisticated portfolios.” ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.