The year opened with a shock: wildfires ripping through the Los Angeles area in January and generating insured losses of around $40bn.
Swiss Re Institute flagged the figure as a new record for wildfire claims. Roughly two-thirds of payouts will land on primary insurers, with reinsurers taking the balance.
The cat bond market felt only a limited direct hit given its light wildfire exposure, but aggregate structures saw erosion, and worldwide index covers as well as junior indemnity layers have already paid out. That activity dented both new issue pricing and secondary levels.
Even so, two fresh wildfire-related transactions cleared the market in H1 — both with combined wildfire and fire-following earthquake protection.
One priced in Q1, another was still in marketing at the June cutoff. Together with the Palisades and Eaton fires, those deals kept investor focus trained on so-called secondary perils, aggregate protection, and wildfire modeling.
Severe convective storms remained another weight on US losses. The Storm Prediction Center counted 1,298 preliminary tornado reports by 30 June, the second-highest mid-year tally on record and just shy of 2024’s pace.
PCS pegged insured losses from March’s Midwest outbreak at $7bn. Tornadoes from 16–18 May potentially damaged close to 63,000 properties, with reconstruction costs near $16bn, according to Cotality.
Elevated SCS claims combined with the LA fires chewed into annual aggregate cat bonds, and with the US wind season still ahead, erosion risks remain a key concern.
Beyond the US, Europe and Asia-Pacific also took hits. Windstorm Eowyn swept through in late January, generating insured losses of €0.7bn per PERILS.
In Australia, Cyclone Alfred and the North Queensland floods combined to leave an insured bill of A$1.7–2.6bn, depending on source. The Insurance Council of Australia set Alfred’s losses at A$1.4bn, while PERILS put the figure higher at A$2.3bn, with an extra A$0.3bn from floods.
March brought a magnitude-7.7 quake near Mandalay, Myanmar. The World Bank estimated $11bn in direct asset damage, but low insurance penetration kept insured losses negligible. Atlas Reinsurance pegged losses in neighboring Thailand at about $29mn.
Mid-2025 closes with investors parsing aggregate erosion, reinsurers recalibrating wildfire risk, and the industry bracing for what the second half may deliver.
