Record $24.7B ILS Issuance Drives 2025 Market Growth

Swiss Re's Insurance-Linked Securities Market Insights, Edition XXXIX, February 2026 provides a detailed review of global insurance-linked securities (ILS) market developments in 2025, highlighting record issuance, sustained capital inflows, and evolving structuring trends.

The report states that the ILS market continued its strong growth trajectory in 2025, with a record $24.7 billion in notional issuance, the highest annual volume in the history of the market, according to the report. Outstanding notional approached $60 billion by year-end, up from approximately $48 billion at the end of 2024, reflecting continued capital inflows and benign loss activity, per Swiss Re.

Primary issuance exceeded maturities throughout the year, resulting in positive net cash flow into the catastrophe bond market, according to the report. Cumulative net cash inflow for 2025 was estimated at $12.3 billion, supported by roughly $6 billion in coupon payments and inflows, notably from Undertakings for Collective Investment in Transferable Securities (UCITS) funds, per Swiss Re.

From a risk perspective, US wind exposures continued to dominate issuance in 2025, with approximately 43 percent of primary issuances having more than 90 percent expected loss contribution from US wind, and 73 percent having some US wind exposure, according to the report. At the same time, issuance referencing US earthquake rebounded sharply, with $3.0 billion issued and its relative share nearly doubling year over year, per Swiss Re.

The report notes that risk spreads and average multiples declined over the course of 2025 as large capital inflows and maturing investments created substantial deployable capacity for investors. Spread compression was further intensified by a bid-heavy secondary market environment until mid-fourth quarter, according to Swiss Re.

Secondary market performance alternated between periods of subdued trading activity and episodic increases in turnover during primary issuance windows and portfolio rebalancing, according to the report. Secondary spreads generally tightened during the year, consistent with excess capital and a softening reinsurance and ILS environment, per Swiss Re.

Swiss Re's Global Cat Bond Total Return Index recorded an 11.4 percent return for 2025, marking another year of double-digit performance, according to the report. Since 2021, the index delivered a cumulative return of 61 percent, with Hurricane Ian in 2022 representing the only significant drawdown during that period, per Swiss Re.

The report also examines catastrophe events in 2025, noting that it marked the sixth consecutive year in which insured natural catastrophe losses exceeded $100 billion globally. Losses were driven largely by a high frequency of medium-sized events, including severe convective storms and wildfires, rather than a concentration of major peak-peril events, according to Swiss Re.

A focused section on Los Angeles wildfires highlights increased issuance of wildfire-exposed cat bonds in 2025, the highest level to date, according to the report. While certain wildfire events did not trigger per-occurrence payouts, they contributed to aggregate structures and coincided with ongoing improvements in modeling, underwriting discipline, and structuring practices, per Swiss Re.

The report also analyzes Hurricane Melissa, which made landfall in Jamaica on October 28, 2025, as a Category 5 storm, causing physical damage approaching $9 billion. Under Jamaica's parametric catastrophe bond structure, the $150 million bond triggered a full principal payout following the application of predefined atmospheric pressure parameters, with the World Bank announcing the full payout on November 7, 2025, according to the report. Swiss Re states that this case demonstrated how parametric mechanisms can provide rapid liquidity compared to traditional indemnity-based processes.

Overall, Swiss Re concludes that the ILS market in 2025 was characterized by record issuance, sustained investor demand, tightening spreads, structural innovation, and continued expansion into new perils and geographies, according to the report.