The devastating Palisades and Eaton wildfires that struck the Los Angeles area in January 2025 served as a real-world stress test for outstanding wildfire catastrophe bond structures, while also increasing investor confidence in allocating to the wildfire peril, according to Swiss Re Capital Markets.
In its recently published ILS market insights report, Swiss Re Capital Markets, the insurance-linked securities (ILS) and catastrophe bond structuring division and investment banking unit of the global reinsurer, outlined that one of the defining themes of the cat bond market in 2025 was the rapid expansion of coverage for wildfire risk, alongside traditional peak perils.
However, the firm also noted that the 2025 catastrophe year was active across several peril regions, with it marking the sixth consecutive year in which insured natural catastrophe losses exceeded $100 billion.
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