Record levels of catastrophe bond market issuance in 2025 are reshaping the pricing landscape, AM Best believes, but the rating agency sees no sign of a slow-down ahead, as “all indications point to continued growth.”
Insurance-linked securities (ILS) market capacity is at an all-time high and projected to end 2025 by having grown to around US $114 billion, with the catastrophe bond market the largest component of this.
While returns are down on the prior year at this stage, cat bonds continue to deliver spreads that remain attractive to investors, alongside the non-correlation with broader financial instruments and benchmarks and this continues to pull capital to the sector.
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