Aon reports that Q1 2025 saw $6.5bn in new catastrophe bond issuance, setting a first-quarter record and surpassing the previous high by over $2.6bn.
Issuers accelerated their transactions to take advantage of favorable pricing and abundant capital, pulling spring deals into the early part of the year.
Investor appetite remained strong. Over 60% of issued tranches were upsized, driven by robust demand in a market where spreads continued to tighten. Issuers who moved early secured better terms and capacity ahead of expected seasonal pressure.
Q2 2025 is on pace to reach $10.35bn in new issuance across 32 transactions, according to Aon.
Average deal sizes have grown nearly 24% compared to Q2 2024, reflecting continued demand from insurers and other risk-transfer buyers.
The quarter included two landmark transactions, each exceeding $1.5bn—the largest ever seen in the catastrophe bond market.
Despite this significant issuance volume, market spreads declined approximately 3% from Q1 levels, indicating sustained investor confidence and capacity availability.
Market expansion is not only being driven by existing participants scaling up but also by new sponsors entering the space.
After factoring in maturities, the outstanding catastrophe bond market is expected to grow by $4.bn in Q2 and $7.2bn in H1 2025—an increase of 15% since the end of 2024.
This growth underscores continued capital inflows, either from reinvestment by current investors or allocations from new entrants. Aon’s data shows that the market has steadily grown since 2016, reflecting a structural shift in how risk capital is sourced and deployed.
