Record H1’26 Cat Bond Issuance Driven by Rising Sponsor Comfort and Diversified Risk

Given how H1 2026 has set a new record for cat bond issuance, we asked Adderley whether he has noticed any key structural shifts or emerging trends within the market that have helped drive this volume.

“I don’t think there’s anything fundamentally different in the structures. I think the market is going to continue to gain further momentum simply because more people are becoming comfortable with cat bonds and insurance-linked securities (ILS),” Adderley said.

“There is a lot of investor capital out there waiting to be deployed, and we are seeing a steady influx of new sponsors. On top of that, market participants are increasingly mixing different types of risks together. A few years ago, we primarily saw property catastrophe deals dominate the space, but now we are regularly seeing cyber and casualty risks being introduced. What is really driving this momentum is that people are getting comfortable and the market itself is becoming mainstream.”

As highlighted, the cat bond market continues to see a significant wave of first-time sponsors entering the space. While this expanding participation is excellent for the market’s long term health, Adderley emphasises that ensuring each new sponsor’s initial experience is seamless remains equally critical.

“It is incredibly important because you want that first experience in the market to be positive,” Adderley explained.

“Because cat bonds are executed so frequently now, the overall process is much better than it used to be when the market was still relatively new. New sponsors today experience a much smoother, streamlined process than they would have a number of years ago.

“I don’t hear stories of flawed structures or sponsors being unhappy with how their transactions settled. Instead, I hear the complete opposite. This means the cat bond product is doing exactly what it is supposed to do, which is precisely what we want. As a direct result of that success, we are seeing more sponsors reliably returning to the market to renew their expiring deals.”

Adderley continued: “I also think both the legal documentation and market language are simpler today. With cat bonds becoming a mainstream risk transfer tool, first-time sponsors are entering the market with a much clearer idea of what the execution process is actually going to look like.”

Meanwhile, as AI remains a dominant topic across the broader re/insurance sector, Adderley remains realistic and somewhat skeptical about how much of an immediate impact it will have on the ILS and cat bond markets.

“I think AI will be used a lot more in the future, but it isn’t being utilised heavily yet. The insurance and reinsurance sectors have traditionally been slow to adapt to new technology. While AI is prominent globally, I do not see the industry acting as a first mover here. I don’t expect the sector to gravitate heavily toward it within ILS or cat bonds just yet.”

To end, Adderley highlighted that data and modeling firms introducing more robust casualty models is driving fresh momentum for the asset class.

“There are more casualty deals in the market, meaning more cash flow deals and casualty sidecars. We are definitely seeing more cat bonds for casualty business, and structures that mix both property catastrophe and casualty together. Ultimately, this shows that investors are far more sophisticated and comfortable with taking on these risks today.”

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First Published In Artemis, June 2026