According to Moody’s Ratings, issuance of higher expected loss (EL) catastrophe bonds has risen slightly in 2024 and 2025, as pricing for higher-severity risks has declined, encouraging investors to allocate more capacity to higher-frequency exposures.
It’s important to note that catastrophe bonds that are more exposed to higher frequency losses typically carry higher ELs, while those tied to less frequent but more severe risks tend to have lower ELs.
“Over the past few years, the reinsurance market has steadily increased prices and attachment points to lower frequency-related catastrophe losses such as those from severe convective storms or wildfires. This was in response to these “nonpeak perils” contributing an increasing amount to annual catastrophe losses,” the rating agency explained.
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