Growth in Catastrophe Bond Sector - 2026 Insights

Robust Growth in Catastrophe Bond Sector in Early 2026

The catastrophe bond sector saw notable activity at the beginning of 2026, recording the second-highest first quarter in terms of issuance volume. This momentum could potentially push the market past the $20 billion issuance mark for the year, as noted by Brad Adderley, Managing Partner at Appleby. He emphasized that the strong performance observed in Q1 is a continuation of the trends seen in 2025.

While Adderley anticipates a possible decrease in issuance during the third quarter, he believes that numerous renewals could maintain the market's vigor. The private insurance-linked securities (ILS) sector remains on an upward trajectory, buoyed by a robust 2025, with several significant private catastrophe bond deals executed early in 2026.

Preferences for Private Catastrophe Bonds and Emerging Trends

Sponsors tend to favor private catastrophe bonds for their expedited process and straightforwardness compared to public offerings, especially for smaller transactions. This preference is likely to further drive the expansion of the private ILS market. The sector is also keen on branching into new risk areas like wildfires and cyber, although Adderley advises caution regarding the speed of growth and investor acceptance.

Interest in casualty sidecars within the ILS market is on the rise, with recent issues ranging between $300 million and $500 million. The potential for the market to reach $1.7 billion exists, but Adderley points out the need to observe a series of transactions over time to gauge sustainability.

Bermuda's Role in ILS Activity

The past year marked a record high in new collateralized insurer registrations in Bermuda, contributing to the increase in catastrophe bond and ILS activities. Adderley attributes this growth to the lack of new risk class allowances by the Bermuda Monetary Authority, which could further accelerate the development of collateralized insurers. These entities offer adaptability for emerging risk types, although their use for claw-back structures remains limited among clients.

For a comprehensive view, the full report is available at Artemis.