Q1’26 Suggests Cat Bond Issuance Could Reach $20bn Again, Private ILS & Sidecar Surge to Continue

“With the first quarter this year becoming the second busiest opening quarter the market has ever seen, it would appear that the market is continuing to withstand the rapid momentum it gained from last year. We’ve had a very strong Q1, and I believe the market will have a very strong first half of the year,” Adderley told Artemis.

“The market will likely get quieter during Q3 when there’s usually not many cat bonds being issued, but I know that there also seems to be a lot of renewals taking place this year. But, just based on the movement that’s being seen, I wouldn’t be surprised if 2026 did end up surpassing last year’s record.”

Last year, the private ILS space also experienced a rapid rise in momentum, as 2025 private cat bond issuance ended up exceeding the full-year amounts of several recent years.

In Q1’26, it appears this pace has continued, as we observed several significant private cat bond transactions being issued across the market. Given this, we asked Adderley what he believes is driving this trend.

“Sponsors are drawn to private cat bonds because they are faster and less complex to execute than public ones, especially for smaller transactions. As new entrants prioritise this efficiency, I expect the private ILS market to keep growing,” Adderley said.

While the catastrophe bond market continues to expand further into new perils like wildfire and cyber, Adderley remains cautious about the pace of growth in 2026.

“Over the years, we’ve seen cat bond mechanisms evolve, and it’s always interesting to see how regulators and investors respond,” Adderley notes. “Market leaders have discussed expanding into new perils for years, but the process is historically slow. For example, it took a long time to issue the first cyber cat bond. So, while terms may shift soon, the real question is whether investors will accept them.”

Another significant trend emerging in the ILS market is the rise of casualty sidecars. When asked if this momentumwill persist through 2026, Adderley noted that most casualty sidecars issued to date have ranged from $300 million to $500 million.

“We have already seen several casualty sidecars launch in the past year, ”Adderley said. “Could the market reach $1.7 billion again? I’d like to think so. However, what I’ve learned from investors and clients is that we won’t truly know which structures are successful until we have a larger sample size, perhaps five to seven deals and a longer period to review them (for instance 6 to 7 years later). It will be interesting to see how the market performs throughout the rest of the year.”

Following a record-breaking year for new collateralized insurer (CI) registrations in Bermuda, which drove a significant uptick in cat bond and ILS activity, Adderley analysed the factors fueling this momentum.

“If the Bermuda Monetary Authority does not allow new risk classes to be written by SPIs, I expect the use of collateralized insurers to grow even further,” Adderleyexplained.

“The choice often comes down to a mixture of the specific risk class and the investment policy. While CIs can technically be structured to allow for claw-backs, we aren’t seeing that as a primary driver; very few clients are actually utilising them for that purpose. For most, the CI remains a more flexible vehicle for evolving risks,” he said.

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First Published In Artemis, April 2026