Insurers Want a Bigger Slice of the Bank Risk Transfer Boom
Insurers are targeting a 50% increase in significant risk transfer (SRT) deals in 2025, with growth expected in corporate loans and mortgages, according to a survey by the International Association of Credit Portfolio Managers. Insurers protected €4.7 billion of SRT tranches in 2025, up from €2.7 billion in 2024. Banks use SRTs to hedge against loan defaults and free up capital. The Bank of England has raised concerns about unfunded SRTs, which rely on insurers' ability to honor guarantees. Key
How this was made
The 30-second read
Why it matters
The expanding SRT market may boost premium income for participating insurers while adding credit‑risk exposure, influencing bank capital management.
Market read
The projected growth in SRTs could reshape credit risk transfer dynamics, affecting both insurers and banks.
What to watch
Potential strain on insurers' balance sheets if loan defaults rise sharply.
Background
A survey by the International Association of Credit Portfolio Managers of 14 global insurers/reinsurers shows a projected 50% increase in SRT activity in 2026.
Ticker impact
AXIS Capital is listed as an insurer investing in unfunded SRTs, tying it to the sector’s growth outlook.
Potential modest rally if market expands; watch capital adequacy metrics.
Survey data points to a 50% rise in SRT volume, benefiting participants.
Banco Santander is cited as a lender that regularly places SRTs with insurers, linking it to the growing market.
Slight bullish bias if SRT demand accelerates.
The article notes Santander’s active role in SRT placements amid sector expansion.
Market effects
The survey suggests a sizable increase in insurer‑backed credit guarantees, potentially reshaping the credit‑risk landscape for banks.
European banks dominate the SRT market (63% of reference portfolios), with growing activity in the U.S. (17%).
If insurers expand SRT participation, it could affect global credit spreads and bank capital ratios.
Counterpoint
Regulatory concerns about insurer guarantees could limit growth and increase systemic risk.
Key entities
- InsurerMunichRe AG
European reinsurer active in unfunded SRTs.
- InsurerAXA SA
Global insurer participating in SRT market.
- InsurerAXIS Capital Holdings Ltd
U.S. insurer investing in credit guarantees.
- BankBanco Santander SA
Lender regularly placing SRTs with insurers.
