Insurers Eye Larger Share of Risk Transfer Market

Insurance companies are looking to capitalize on the growing trend of significant risk transfers (SRTs) in the financial sector. According to a survey by the International Association of Credit Portfolio Managers, insurers expect to participate in about 50% more SRTs than in 2025. The growth is expected to be strongest in transactions linked to corporate loans and asset-based finance.

The use of SRTs allows banks to insure their loans against default and free up capital. Most transactions are funded, with investors putting up cash as collateral to cover potential losses in return for a coupon. Insurers tend to participate in unfunded SRTs by issuing credit guarantees. However, the Bank of England has expressed concerns that this type of deal may leave banks exposed to greater risk at times of stress.

The IACPM survey found that the number of unfunded credit protections increased to 96 in 2025, from 78 the previous year. Insurers protected approximately €4.7 billion ($5.5 billion) of SRT tranches last year, compared with €2.7 billion in 2024.

Lending in the European Union accounts for 63% of the reference portfolios hedged via unfunded credit protections, followed by the U.S. with 17% and other European nations with 12%. Banks such as BNP Paribas SA, Mitsubishi UFJ Financial Group Inc., and Erste Group Bank AG have recently marketed or completed unfunded credit protections.