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Catastrophe bond market enters 2026 with strong tailwinds - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Catastrophe bond market enters 2026 with strong tailwinds by Matthew Lerner Catastrophes , Insurance-linked Securities Aon , Arthur J. Gallagher & Co. , Howden , Munich Re Feb 3, 2026 The insurance-linked securities market appears set for another robust year in 2026, following a record-breaking 2025 that saw approximately $24 billion in new issuance. Broadening investor support, including through an ILS exchange-traded fund, coupled with potential reinvestment from maturing bonds and investments, should provide market momentum this year, sources said. “From an investor standpoint, generally speaking, investors are more than happy to continue to allocate in the space because of the performance of the cat bond market,” said Richard Pennay, New York-based CEO of Aon Securities, Aon’s ILS business. Roughly $13.8 billion of catastrophe bonds will mature in 2026, which, if reallocated in the market, would represent a substantial amount of capital to complement the year’s new issuances, he said. About $10 billion is due in the first half of the year. “We expect good momentum in the market and will continue to see activity through the first six months,” Mr. Pennay said. “Investors have money to put to work both from net inflows of funds and from cat bond coupons and redemptions,” William Dubinsky, chairman of Gallagher Securities, a division of Arthur J. Gallagher & Co., said in an email. “We see a very strong first-quarter pipeline.” Better modeling and investor understanding of risks, such as wildfires and severe convective storms, also is driving demand in the property catastrophe ILS market, he said. Mr. Dubinsky added that 2026 will likely again exceed $20 billion in non-life 144A cat bond issuance, the private placements that make up most of the cat bond market, and may be another record year. 2026 could be similar or slightly larger than 2025 in issuance volume, Mitchell Rosenberg, New York-based co-head global ILS, Howden Capital Markets & Advisory, said in an email. “We have seen an immediate restart of the catastrophe bond issuance pipeline in the first weeks of January,” he said. New cedents helped propel the market in 2025, with 10 in the first half and six in the second, Mr. Pennay said. “Sixteen new clients coming to market in one year is quite exceptional.” Demand for more reinsurance catastrophe capacity has helped bolster cat bond growth, said Marcus Winter, Princeton, New Jersey-based president and CEO of Munich Re North America property/casualty. Exposure concentrations continue to grow, and model updates have led to higher loss assumptions, leading to increased demand for risk transfer. As cedents’ underlying reinsurance programs grow, the use of alternative capital increases as they look to add alternative sources to their capital mix, Mr. Winter said. Catastrophe reinsurance buyers purchasing increased limits have helped cat bonds grow in scale as well, Mr. Pennay said. The average deal size in 2025 was approximately $280 million, and Aon Securities executed three transactions in excess of $1 billion in 2025, he said. New investors also bolstered ILS market performance, Philipp Kusche, New York-based co-head global ILS and chair, Howden Capital Markets & Advisory Europe, said in an email. “The diversification and maturity of the investor base, supported by a broad universe of pension funds, sovereign wealth funds, endowments and family offices, has created a more stable pricing environment and underpinned sustained demand,” he said. The ILS market “has matured to a point where it is an appropriate investment for the broader investing public,” said Ethan Powell, Dallas-based principal and chief investment officer of Brookmont Capital Management, which launched an exchange-traded fund for ILS in the first quarter of 2025. For the ETF, Brookmont is focused on small- to medium-sized institutions that already know the asset class, as well as some “more sophisticated” independent registered investment advisers, he said. The expansion of the catastrophe bond market has produced more bonds with a greater diversity of sponsors, geographies and perils, and further expansion and diversification is likely, Mr. Powell said. Related News Berkshire Hathaway Specialty names head of financial institutions February 3, 2026 Radian completes $1.7B Inigo acquisition February 3, 2026 Suncorp’s earnings pressured by nearly $1B disaster tab February 3, 2026 Perils lifts Australia storm losses to $1B February 3, 2026 TD General secures $84M cat bond February 3, 2026 Lisa Quest to succeed Lay as Marsh U.K. CEO February 3, 2026 Zurich reveals $137M stake in Beazley February 3, 2026 Munich Re Africa names new CEO February 3, 2026 Climate risks outpace ability to insure infrastructure expansion: Report February 3, 2026 Facebook-f X-twitter Linkedin-in Business Insurance is a singular, authoritative news and information source for executives focused upon risk management, risk transfer and risk financing. 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