Catastrophe Bond Issuance Hits Record $17.3 Billion in First Half

Insurance-linked securities (ILS) capacity continued to reach new highs in the first half of 2026 as record catastrophe bond issuance and strong investor capital contributed to softer reinsurance pricing, according to a new AM Best report. 

The Best's Market Segment Report, "Record-Breaking Catastrophe Bond Issuance in First Half of 2026; ILS Capacity Experiences Rate Softening at Renewals," examines developments in the ILS market as part of AM Best's coverage of the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. 

Catastrophe bonds, like many traditional reinsurance transactions, were routinely oversubscribed during the first half of 2026. Three consecutive years of strong ILS and reinsurance market returns have left capacity providers with substantial capital available for deployment, according to the report. 

"By underwriting and restructuring reinsurance deals at the onset of the hard market in 2023, capacity providers positioned themselves so that no catastrophe events in the past 3 years have been able to dent their large buildup of retained earnings," Wai Tang, senior director at AM Best, said. 

Market participants have cited growth in the ILS sector as a factor behind softer reinsurance pricing at midyear renewals, with ILS growth outpacing increases in traditional reinsurance capital. Midyear 2026 property catastrophe renewals were increasingly favorable to buyers as traditional and ILS reinsurance capacity remained abundant. 

"The supply of capital was estimated to have surpassed demand by over 25 percent, driving further declines in reinsurance pricing," Matt Tuite, director at AM Best, said. "Capacity providers are finding market conditions attractive and are willing to accept lower prices to assume these risks." 

Catastrophe losses have remained relatively manageable in 2026, with the market's attention now focused on the North Atlantic hurricane season. AM Best said a key issue heading into January 2027 renewals is the extent to which pricing could adjust further if catastrophe loss activity remains relatively benign through the rest of 2026. 

The 144A property catastrophe bond market set another first-half issuance record, reaching $17.3 billion. Maturing catastrophe bond capital and retained earnings were redeployed into new issuances, while additional capital also entered the market. 

Second-quarter issuance reached $11.3 billion, surpassing the quarterly record set in the second quarter of 2025. 

"For perspective, the 2Q 2026 issuance was larger than total annual issuance for most of the history of the catastrophe bond market, which demonstrates the rapid growth the market has experienced in recent years," Mr. Tang said. 

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