While the bulk of Q3 2025 risk capital came from full Rule 144A deals, in terms of the number of transactions, cat bond issuance in the third quarter of 2025 was dominated by privately placed, or cat bond lite deals, with 17 of the 23 transactions brought to market issued privately.
Highlighting this impressive feat, Adderley said, “I think it’s a driving trend of new players coming into the market. Private cat bonds are normally smaller, because they’re owned by new entrants who are specifically looking at new risks.
“I think the momentum that’s being seen is a testing ground to what’s going on in the market, and this quarter is a prime example of how effective private cat bonds are within the ILS space.”
Throughout the first nine months of 2025, we’ve also seen momentum continue to grow for casualty reinsurance sidecars, which clearly suggests that the structure remain a key focus for protection buyers, with increased investor appetite for ILS opportunities helping many traditional reinsurers to expand their sidecars in 2025.
Addressing this momentum, Adderley said, “There are a number of players in the market that are writing casualty, and this has been evident this year through the number of casualty raised transactions that we’ve seen.
“We’ve had deals from Ascot, Enstar, and MultiStrat. There is a chance that by year end we will see around seven transactions. And I believe that most casualty sidecars are around $400 million plus, if not more.
“If all seven of these transactions get finalised, and there may be more because there’s likely other deals that we don’t know about, if they all raise roughly $500 million, that’s $3.5 billion of new capital that will be deployed in the market.”
However, Adderley questions whether this momentum will continue into 2026.
“It’s important to think about whether the marketplace has the space for more than $3.5 billion in casualty, when casualty itself has its natural complexities. To me, $3.5 billion seems like a lot of capital to be deployed in a short period. To my assumption, we won’t see momentum continue next year because of the size that it has already reached this year.”
Following the more than $1 billion of catastrophe bond and related ILS issuance recorded in Q3 2025, which has taken the market to new heights, with nine-month issuance at a huge $18.6 billion, it seems very likely that the market will exceed the record $20 billion figure this year.
Last time we spoke to Adderley, he outlined that he wasn’t sure what will stop the momentum that’s being seen across the space, and as the third quarter comes to a close, he echoed the same feeling.
“Momentum is certainly going to continue, and I don’t think that next year’s full-year issuance will be significantly less than what this year’s total is going to be. I wouldn’t be surprised if it’s the same.
“As I’ve said before, I think cat bonds have become a natural tool, they’re not a new tool anymore. It’s a natural thing that organisations want to be involved in.
“I think issuance is going to stay at least at its current size for the time being. Whether it’s bigger, is a separate question, but I don’t think it’s going to go backwards by $5 billion. I just think it’s such a natural tool now. I’m still equally bullish until someone educates me otherwise,” Adderley concluded.
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First Published In Artemis, October 2025
