PGGM / PFZW ILS Investments Returned 12.4% in USD, Ended 2025 at $8.904bn AUM

Why It Matters

The results underscore ILS as a resilient alternative‑asset class that can boost pension fund returns even when currency headwinds bite, encouraging more institutional capital into catastrophe‑bond markets.

Key Takeaways

• PGGM's ILS portfolio returned 12.4% in USD for 2025.
• Assets under management grew to $8.904 bn, up from $8.68 bn.
• ILS makes up 3% of PFZW’s €252 bn (~$275 bn) fund.
• Euro‑denominated return fell to –0.6% due to dollar weakness.
• PFZW received a $150 m dividend from Vermeer Reinsurance.

Pulse Analysis

The insurance‑linked securities market has become a cornerstone for large pension funds seeking non‑correlated returns. PGGM, the specialist manager for PFZW, demonstrates how a focused ILS strategy can deliver double‑digit performance, with a 12.4% USD gain in 2025 despite a modest AUM increase. This outperformance follows a 15.1% return in 2024, highlighting the sector’s capacity to generate strong yields when catastrophe losses are contained and underwriting cycles are favorable. As the largest single‑entity investor in ILS, PGGM’s approach blends direct reinsurance partnerships, dedicated manager allocations, and proprietary risk‑sourcing vehicles, reinforcing its market leadership.

Currency dynamics played a pivotal role in the reported outcomes. While the portfolio posted a solid 12.4% return in dollars, the euro‑based figure turned negative at –0.6% because the euro weakened against the dollar throughout the year. Nevertheless, the underlying insurance and reinsurance assets performed well, with limited loss events and a smooth settlement of California wildfire claims bolstering the results. A $150 million dividend from the Vermeer Reinsurance joint venture further enhanced total returns, illustrating how ancillary income streams can supplement core ILS earnings.

For institutional investors, the PFZW case signals that ILS can act as a reliable diversifier amid volatile equity and fixed‑income markets. The modest AUM growth to $8.904 bn suggests steady capital inflows, while the 3% allocation within a $275 bn pension fund underscores the sector’s scaling potential. PGGM’s triple‑focus strategy—partnering with global reinsurers, leveraging specialist managers, and maintaining proprietary risk‑access points—positions it to capture future opportunities as climate‑linked risk pricing evolves. Expect continued interest from pension funds and sovereign wealth entities looking to hedge traditional market exposure with catastrophe‑bond returns.