Stone Ridge ILS Funds Yield 14–33% as AUM Tops $10B on Hardening Insurance Market

Stone Ridge’s recent performance in its mutual insurance-linked securities (ILS) and reinsurance fund strategies offers a strong illustration of how specialized alternative risk strategies can capitalize on market conditions. The 33% return from the Reinsurance Risk Premium Interval Fund and 14.27% from the High Yield Reinsurance Risk Premium Fund for the period ending October 31, 2025 underline both the opportunities and the risks in this segment.

The growth in assets under management (AUM) from approximately $5.3 billion in mid-2025 to over $6 billion by October reflects continued investor confidence, buoyed by strong fund returns and the wider rise in the reinsurance premium environment. It suggests Stone Ridge has effectively positioned itself to capture the tailwinds associated with the hardening of the reinsurance market.

From a strategic standpoint, this momentum elevates Stone Ridge’s competitive positioning in the ILS and reinsurance asset class. With $10 billion+ in total ILS and reinsurance assets across both mutual and private strategies, the firm gains superior access to origination of new risks (e.g. quota shares, sidecars), favorable terms in underwriting, and perhaps greater influence in structuring deals. Also, the growth of direct catastrophe bond exposure within its mutual funds and its multi-strategy fund suggests a tilt toward more liquid ILS assets when conditions permit, which can help manage risk and provide flexibility.

However, risks remain. The positive performance hinged in part on a tightening in terms, elevated premiums, and higher deductibles—all of which can reverse in a soft market cycle. Notably, despite large insured losses (e.g. from wildfires), the fund’s returns were enough to offset these, but future losses or a dramatic softening could impair performance. There are also capacity constraints in ILS markets, regulatory and climate risk exposures (particularly in property catastrophe), and possible valuation concerns during periods of stress.

Open questions for investors include: Can Stone Ridge sustain strong returns if reinsurance market terms ease? What will be the impact of future catastrophic loss years or adverse events? How will interest rates, inflation, and climate change affect underwriting costs and insured losses? Is there a ceiling for AUM growth without degrading return potential, particularly for illiquid strategies—can the scale be managed without compromising discipline? And finally, how will diversification across casualty reinsurance vs catastrophe risks impact volatility and risk returns going forward?