The insurance-linked securities market enters 2026 with momentum intact after a record-setting 2025 that delivered roughly $24 bn in new issuance.
Market participants expect another active year as capital availability expands and investor appetite remains steady.
Broader participation supports the outlook. Investor inflows continue to widen, including demand channeled through an ILS exchange-traded fund, while maturing catastrophe bonds free capital for reinvestment.
Together, those forces reinforce issuance capacity as the year unfolds.
Richard Pennay said investor sentiment toward catastrophe bonds remains constructive. He noted that performance continues to anchor allocations, keeping investors engaged and willing to deploy capital across the space.
Around $13.8 bn of catastrophe bonds mature during 2026. If recycled into new transactions, that capital would meaningfully supplement fresh issuance.
Approximately $10 bn matures during the first half of the year, supporting activity early in the cycle.
Pennay said issuance pipelines restarted quickly in January, with momentum expected to carry through the first six months. Capital availability comes not only from inflows but also from coupons and redemptions returning to ILS investors.
William Dubinsky said investors retain funds ready for deployment, driven by both net inflows and maturing positions. He described first-quarter issuance visibility as strong, reflecting active structuring discussions.
Risk comprehension also improved. Dubinsky said advances in modeling and investor understanding of exposures such as wildfires and severe convective storms continue to support demand across property catastrophe ILS structures.
Issuance volumes remain elevated. Dubinsky expects non-life Rule 144A catastrophe bond issuance to exceed $20 bn again in 2026, with potential to challenge another annual record depending on execution timing.
Mitchell Rosenberg said early-year issuance activity suggests 2026 matches or slightly exceeds 2025 volumes. He pointed to a rapid restart of the catastrophe bond pipeline during the opening weeks of January.
Cedent participation widened materially last year. Pennay said ten new issuers entered the market during the first half of 2025 and six more followed in the second.
Sixteen first-time issuers within one year marked an unusually strong expansion phase.
Reinsurance demand continues to reinforce growth. Marcus Winter said exposure concentration keeps increasing as models adjust loss assumptions upward. Those shifts drive cedents toward additional risk transfer capacity.
Winter added that as traditional reinsurance programs expand, cedents increasingly supplement capital structures with alternative capacity. Cat bonds serve as a scalable option within that mix as balance sheet pressure builds.
Deal sizes also trended higher. Pennay said average catastrophe bond transactions reached about $280 mn during 2025.
Aon Securities executed three transactions exceeding $1 bn during the year, highlighting how buyer demand supports larger placements.
Investor composition strengthened further. Philipp Kusche said a more diversified investor base stabilized pricing and sustained demand. Pension funds, sovereign wealth funds, endowments, and family offices now represent a broader share of allocations.
Public market access also expanded. Ethan Powell said the ILS market matured enough to support broader investor participation. Brookmont launched an ILS exchange-traded fund during the first quarter of 2025.
Powell said the ETF targets small and mid-sized institutions familiar with the asset class, along with more sophisticated independent registered investment advisers.
Increased issuance diversity across sponsors, regions, and perils supports further expansion, reinforcing ILS as a durable component of catastrophe risk transfer markets.
