At a time where hedge funds are increasingly attracted to the insurance-linked securities (ILS) market, they are also adding significant pressure to recruitment within the space, which according to 20Twenty Search’s Jason Sykes, raises questions about its impact on talent and market stability.Speaking with Artemis, Sykes, who serves as an Advisor at the re/insurance focused recruitment and executive search specialist, explained that hedge funds are no strangers to the ILS market, noting that their involvement has typically been opportunistic, driven by periods of strong returns rather than sustained commitment.“The latest wave of high‑profile hires from specialist ILS firms signals renewed interest – but also raises questions about its impact on talent and market stability,” Sykes explained.“As we approach the end of another year of strong returns and record ILS issuance, companies such as Arini Capital Management and Qube Research & Technologies have announced high-profile hires from specialist ILS firms.

They are joined by firms including Verition Fund Management, Squarepoint Capital, and Millennium Management Global Investment, all of which are understood to be exploring ILS strategies,” Sykes continued.Reflecting on the appeal of ILS, Sykes outlined that amongst geopolitical perma-crises, fragile sovereign finances and concerns surrounding artificial intelligence, catastrophe bonds still remain the mainstay of the ILS market, offering completely uncorrelated returns.“And for those investors looking for something different, the choice is widening,” Sykes noted.

“The recent growth of casualty and cyber, for example, addresses a variety of investment appetites, return expectations and preferred holding periods.Non-cat ILS currently account for an estimated $3-4 billion of capacity, and forecasts from the ILS community suggest that could rise to $10 billion by 2026.” While 2025 has been a notable year for traditional catastrophe bonds, a previous commentary from Artex Risk Solutions However, amongst this momentum, Sykes warns that recent hedge fund hires from specialist ILS firms could potentially have major consequences for the ILS talent pool.The advisor outlined how these waves of hires add to the challenge posed by market insiders’ startups, creating talent pressure which could also have serious implications for those lured by hedge funds’ recruitment drive.

“For as long as hedge fund managers’ interest in ILS continues, their recruitment drive, underpinned by salaries that often exceed the already-high remuneration on offer in the specialist ILS sector, will make a sticky market even tighter,” Sykes told Artemis.“After all, the ILS sector is known for a workforce stasis that borders on paralysis.Twelve-month notice periods and one-year non-compete clauses are rife, meaning movement among senior professionals is limited, and tenures of 10 years or more are perfectly normal.” “This lack of movement has forced many of the leading ILS players to run increasingly tight ships, with resourcing challenges restricting their ability to develop and grow,” Sykes continued.

However, companies that do end up losing staff to hedge fund challengers may struggle to replace them with equally qualified experts.Sykes emphasised that the absence of a viable pipeline for younger and emerging ILS specialists exacerbates this issue, with the advisor describing the ILS sector as a “foreign country” to recent graduates.The advisor explained that young people who do join the ILS market usually take on roles within catastrophe modelling or go on to work as quantitative analysts, with no clear progression route to fields such as ILS portfolio management.

“But if the new crop of hedge fund market entrants will create a headache for established ILS firms, those who jump ship could also find themselves in difficulty,” Sykes warned.“Hedge funds are defined by their nimbleness and short-term pursuit of promising opportunities.They also have very limited experience of the reinsurance sector and the shocks that periodically come its way.

has prompted them to dip their toes into the ILS market.However, as soon as a large event comes that jolts the market into a new reality they won’t all stick around.” Nevertheless, Sykes told Artemis that those particular ILS specialists who have moved across to these hedge-fund challengers may find their experience to be rather short lived.The advisor indicated that some individuals might manage to reposition themselves within the established ILS sector; however, he warned that because of the scarcity of opportunities for senior staff, others could potentially remain without prospects for an extended period.

“In a market where hedge funds are adding pressure to ILS recruitment, both companies and individuals need clear, specialist advice.Navigating talent shortages, shifting strategies, and evolving opportunities requires insight from recruiters who understand the nuances of the sector and can connect the right people with the right firms.“At 20Twenty, our focus is on helping clients and candidates anticipate change, interpret market signals, and make confident decisions about their next move,” Sykes concluded.

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