2026 begins with a “historically” soft market for the insurance-linked securities (ILS) sector, consultancy Lane Financial LLC said in a new analysis of market pricing and return potential, as catastrophe bond multiples have declined resulting in a forecast for the year ahead of a total return of just 6% after expected losses.
Each year Lane Financial LLC’s Morton Lane and Roger Beckwith take a look at the pricing of issuance in the primary and secondary catastrophe bond markets, to derive a forecast for what investors could expect to see returned in the event of an implied expected level of losses.
For last year, Lane Financial had initially said that the catastrophe bond market had the potential to deliver a total return of around 8.5% in 2025, even after accounting for an expected level of losses to bonds during the year.
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