Cat Bond Issuance Well-Placed to Reach $20bn Again In ‘26, Fueled by Momentum & Proven Success

During the fourth quarter of 2025, new cat bond issuance managed to reach and surpass the $20 billion milestone, setting a new record for total cat bond issuance seen within a calendar year.

This marked an impressive increase from 2024, where cat bond issuance managed to increase by over $1 billion year-on-year to what was at the time a new annual high of $17.7 billion.

It’s the third consecutive year in which annual cat bond issuance has set a new record, and also another year which saw activity levels swell in the final quarter ahead of the key January 1st renewals.

Reflecting on the market managing to hit and surpass the $20 billion milestone in issuance, Adderley explained to us whether he anticipates that this momentum will continue into 2026.

“Since September we’ve seen a number of large new ILS deals, clients raising capital, and a number of new cat bonds being issued in the market, as well as casualty sidecars too. All of this is happening at the same time, which shows how much momentum the market is continuing to gain,” Adderley said.

“The cat bond market is in roller coaster mode at the moment, that I can’t see why it would not reach $20 billion again next year. When I think of the noise I’ve been hearing within the market, I don’t have any reason why I think at least the first half of the year will be equally as good. There’s nothing we’ve been taught this year which has been negative.”

Adderley also shared a key perspective regarding the number of cat bond deals that are maturing, compared to every new deal that’s being issued.

“An interesting question to think about is how many deals are coming off risk compared to every new cat bond deal that’s been issued. The ratio could be quite eye-opening for the market. So, if we think about it, the beginning of next year could look even better for the market just because of having new cat bonds replacing ones that have matured, as well as newer deals being issued too.”

A key trend that’s been observed within the cat bond market in recent years has been the increasing number of new sponsors that are venturing into the space, largely thanks to the attractive risk-return profiles that these instruments provide, as well as increasing market acceptance and familiarity.

In light of this, Adderley expressed how this wave of new sponsors is likely to continue throughout 2026 and beyond.

“We’re seeing more new sponsors coming into the market which showcases how much more comfortable companies are becoming with dealing with catastrophe bonds and ILS.

“As I’ve said before, I really think that the education surrounding cat bonds has improved vastly over the last year. I think we will continue to see new sponsors enter the market, and I would argue that we have reached a new norm now. And I think that’s going to be the case going forward,” Adderley told us.

While public catastrophe bonds have grown substantially throughout 2025, private ILS deals have experienced deep momentum, with 2025 private cat bond issuance exceeding the full-year amounts of several recent years.

Interestingly, Adderley suggests that there may be some correlation between the increase in private ILS deals and the number of new sponsors entering the cat bond market.

“Is it the case that a new sponsor starts with a private ILS deal, finds success with it, and then goes into the process of sponsoring a property catastrophe bond?

“I think the two go hand in hand. Whether sponsors take that step, I don’t know. But the fact that there are more new sponsors makes it reasonable to assume that there are also more private ILS deals being made, because the market as a whole is becoming more familiar with them.”

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First Published In Artemis, January 2026