Swiss Re: Cat Bond Market Grows 15.5% Since 2021
The catastrophe bond market continued its strong momentum in 2026, driving another record period of issuance in the first half of the year. Analysis from global reinsurance firm Swiss Re’s Capital Markets division shows that since 2021 the outstanding cat bond market has been expanding at a roughly 15.5% compound annual growth rate. This growth highlights the increasing relevance of insurance-linked securities (ILS) capacity as part of sponsors’ broader risk transfer strategies.
2026 began with “strong momentum” on the back of a record year of issuance of new cat bonds in 2025. Activity was supported by a “robust investor demand and a steady pipeline of new and returning sponsors seeking protection.” As a result, Swiss Re notes that the $17.6 billion of new catastrophe bond issuance in H1 2026 set a new record for the first-half, surpassing the previous high set one year earlier. By June 30th 2026, notional cat bond limit outstanding reached $64.8 billion, rising from $59.8 billion at year-end 2025.
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While no major catastrophe losses affected the market during H1 2026, macro factors have driven volatility across investment markets. This volatility has helped to further heighten the attraction to catastrophe bonds and ILS. The reinsurance company explains that the growth of the cat bond market over recent years has been at a 15.48% CAGR. Figure 5 in the report shows that net cash flow into the market remained firmly positive during H1 2026, with an estimated $5.0 billion of net new capital entering the market despite the large level of redemptions and maturities.
While 12 new sponsors entered the cat bond market in H1 2026, including ILS fund manager backed structures and new sovereign sponsors, the majority of the growth in notional limit outstanding came via established players. State Farm, Allstate, SageSure and USAA each issued catastrophe bonds in H1 2026 with notional exceeding each sponsor’s respective scheduled maturities. These four sponsors collectively increased their outstanding notional by almost $3.0 billion, materially contributing to the market’s growth.
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Conversely, residual market cat bond sponsors Florida Citizens and TWIA both reduced their cat bond limit outstanding, as their reinsurance needs declined this year. These larger early redemptions, together with the $10.2 billion of scheduled maturities during the first half of the year, released significant investor capital to be made available for redeployment into new catastrophe bond issuances.
