Thought leadership article
ICMIF Supporting Member AM Best provides an overview of some of the latest trends in the cat bond market. ILS market capacity reached USD 120 billion by year-end 2025 with cat bonds and sidecars driving ILS market growth. Meanwhile, ILS market returns are trending down but finished 2025 strong.
Insurance-linked securities (ILS) capacity continues to reach record levels. The ILS market has grown from niche to established with returning sponsors/cedants. Investors’ understanding and confidence in the market has grown. Catastrophe (cat) bond issuance has become routine, as sponsors appreciate another source of capacity, and investors recognise the attractive returns and diversification benefits. The growing market gives investors more opportunities to invest. The market is also expanding with more perils and geographies.
Guy Carpenter and AM Best estimate the ILS market reached USD 120 billion at year-end 2025, up from USD 107 billion at year-end 2024. The 144A property cat bond market reached USD 57 billion outstanding as of year-end 2025; the year-over-year increase from 2024 is nearly USD 12 billion. 144A property cat bonds account for approximately half the capacity of the ILS market.
The article is reproduced from a Best’s Special Report with the kind permission of ICMIF Supporting Member AM Best. To access a complimentary copy of the full report, please click here.
Published March 2026
The ILS market is anticipated to grow in 2026, albeit slower than 2025. The earnings from…
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