Swiss Re Reports Active First Half for ILS Market in 2025

Swiss Re's report, ILS Market Insights: July 2025, reveals that the insurance-linked securities (ILS) market demonstrated strong resilience and investor interest in the first half of the year, with more than $17 billion in notional issuance across nearly 60 transactions. According to Swiss Re, this represents one of the most active 6-month periods in the market's history.

Per the report, catastrophe (cat) bond spreads have remained attractive due to persistently elevated risk-free interest rates and strong investor demand. The Swiss Re Cat Bond Performance Indices showed positive total returns across all durations, supported by the favorable spread environment and stable loss activity in the first half of 2025.

According to the report, secondary market activity remained high, with monthly trading volumes averaging $500 million to $700 million. Prices were stable across both primary and secondary markets, with the exception of slight fluctuations linked to sponsor activity and specific events.

Swiss Re said that catastrophe activity during the period was relatively modest. The report highlights that insured losses remained below average through the first half of 2025, with several notable events—including US convective storms and Australian floods—generating losses but not triggering widespread cat bond payouts.

Per the report, new sponsor and peril types continue to emerge in the cat bond market. Issuers have shown increased interest in covering risks such as severe convective storms, earthquakes, and other nonpeak perils, reflecting a broader diversification trend and evolving risk appetite.

According to Swiss Re, the combination of high investor interest, elevated collateral yields, and strong sponsor activity is expected to support continued growth through the second half of 2025. The report notes that the healthy pipeline of maturities will also help recycle capital back into the market, sustaining issuance momentum.

Swiss Re also observed that sponsors are exploring more complex transaction structures, including higher-frequency and multi-event bonds. According to the report, these developments reflect both innovation in product design and a willingness from investors to engage with diversified risk-return profiles.

Looking ahead, Swiss Re said it expects the ILS market to remain robust amid broader macroeconomic uncertainty. The report concludes that the asset class continues to offer diversification and return potential relative to traditional investments, supported by its low correlation to broader financial markets.