J.P. Morgan Notes ILS Discipline Amidst $11B Q2 Issuance; Illinois Grants DOI Rate Veto Power
By The Reinsurance Daily Editorial ·
J.P. Morgan Notes ILS Discipline Amidst $11B Q2 Issuance; Illinois Grants DOI Rate Veto Power
Twelve Securis Unifies Cat Bond and Private ILS Teams Under $4.65B AUM
Twelve Securis, the insurance-linked securities (ILS) manager operating within Twelve Capital, is consolidating its catastrophe bond and private ILS management functions. The move combines the two distinct teams into a single, unified platform managing the firm's aggregate $4.65 billion in ILS assets. This structural change coincides with the planned departure of Raphael Schwartz, who led the private ILS strategy. The firm is presenting the integration as a strategic move to streamline operations and enhance collaboration across its two core ILS pillars, rather than a fundamental shift in investment strategy.
ILS Capital Remains Disciplined Despite Record Cat Bond Growth, Reports J.P. Morgan
J.P. Morgan analysts report that alternative capital providers are maintaining pricing discipline despite a record-breaking catastrophe bond market. Q2 2026 issuance reached an all-time high of $11 billion, yet spreads have not compressed significantly, indicating that capital is not flooding the market indiscriminately. The report highlights that non-life ILS capital has grown by $12 billion since H1 2025, but this inflow has been measured. Investor demand is being met with a robust supply of new risk from both existing and new cedents, preventing the pricing erosion seen in previous market cycles. This disciplined deployment reinforces the view that ILS investors are now focused on achieving adequate returns rather than growth at any cost.
The average risk-adjusted spread for all outstanding cat bonds was 3.93% at the end of Q2, J.P. Morgan’s data shows, while the equivalent for a US high-yield credit index was just 2.04%, showing the still relatively attractive returns available in the catastrophe bond asset class.
Colombia Deploys Parametric Cover for Smallholder Farmers with IDF Support
The Government of Colombia has finalized a parametric insurance program to protect smallholder farmers from climate-related perils like drought and excess rainfall. The program, with a total risk capacity of $20.14 million, was developed with technical and financial assistance from a consortium of three international partners: the Insurance Development Forum (IDF), the United Nations Development Programme (UNDP), and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ). This initiative represents a critical public-private partnership aimed at building financial resilience for vulnerable agricultural communities.
AIG General Insurance Underwriting Income Climbs 10% in Q2
AIG reported a 10% increase in its General Insurance underwriting income for Q2 2026, reaching $686 million compared to the prior-year quarter. The performance was driven by strong results in North America Personal Insurance and a favorable contribution from the International portfolio. Catastrophe losses were recorded at $170 million, primarily from US convective storms, a decrease from $210 million in the same period last year. The results demonstrate successful underwriting actions and rate increases earning through the portfolio, offsetting inflationary pressures and normalizing loss trends in certain commercial lines.
Chipwich Maker Withdraws $4.5M Lawsuit Against Insurance Agency
Crave Better Foods, the manufacturer of Chipwich ice cream sandwiches, has voluntarily withdrawn its lawsuit against broker Exceptional Risk Advisors. The suit alleged the broker failed to disclose a critical sub-limit within a Key Man insurance policy. Crave Better sought $4.5 million in damages, claiming it was unaware of an $800,000 sub-limit for disability payouts on a policy with a $4.5 million face value for death benefits. The withdrawal, filed "with prejudice," permanently ends the E&O claim, which centered on allegations of professional negligence in the procurement and explanation of the policy terms.
Illinois Governor Grants DOI Power to Overturn Insurance Rate Hikes
Illinois Governor J.B. Pritzker has signed new legislation empowering the state's Department of Insurance (DOI) to review and overturn auto and home insurance rate changes it deems excessive. The law was enacted following analysis suggesting Illinois consumers had overpaid by $1.2 billion since 2022 due to significant rate increases. The legislation was prompted by filings such as a 27% average rate increase from one of the state's largest auto insurers. This gives the Illinois DOI prior approval-style authority, a significant regulatory shift for the state's property and casualty market.
Key Takeaways
- The Chipwich E&O dispute over an undisclosed $800,000 sub-limit on a $4.5 million Key Man policy underscores the need for treaty underwriters to scrutinize underlying policy forms for potential claims leakage, especially in niche lines where complex structures are common.
- With Illinois granting its DOI authority to reject "excessive" rate increases like a recent 27% auto filing, underwriters must factor heightened regulatory risk into pricing for treaties covering Illinois business and stress-test models for potential premium rollbacks.
- The consolidation at Twelve Securis, managing $4.65 billion in ILS, and J.P. Morgan's report on disciplined ILS deployment signal a maturing market. This operational focus on efficiency is a direct response to investor demands for sustainable returns, creating larger, more formidable competitors for specific layers of risk.
- AIG's strong $686 million in Q2 underwriting income demonstrates that traditional carriers are successfully capturing value in the hard market, while J.P. Morgan's analysis confirms ILS capital remains disciplined. This dynamic suggests traditional reinsurers can maintain favorable terms, as alternative capital is not aggressively deploying to erode pricing.
- The new Illinois law, framed around $1.2 billion in alleged consumer "overpayments," represents a material escalation in political intervention in US P&C pricing. This sets a precedent that could be replicated in other states, introducing significant uncertainty into the rate-setting environment for national carriers.
Sources
Twelve Securis combining cat bond and private ILS management teams, as Schwartz to depart — artemis.bm
ILS and alt capital remains disciplined amid record cat bond market growth: J.P. Morgan — artemis.bm
Colombia secures parametric insurance for smallholder farmers, assisted by IDF, UNDP, BMZ — artemis.bm
AIG’s General Insurance Q2 Underwriting Income Up 10% — insurancejournal.com
Chipwich Maker Withdraws Lawsuit Against Insurance Agency — insurancejournal.com
Pritzker Signs Bills Giving Insurance Department Power to Overturn Rate Changes — insurancejournal.com