Best’s Market Segment Report: Record-breaking Catastrophe Bond Issuance in First Half of 2026; ILS Capacity Experiences Rate Softening at Renewals

OLDWICK, N.J.--(BUSINESS WIRE)--Capacity for the insurance-linked securities (ILS) market continues to reach new highs, fueled along by record-breaking catastrophe bond issuances, 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,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the Lloyd’s, life/annuity, health and regional reinsurance markets, will be available during August and September.

According to this report, catastrophe bonds followed the course of many traditional reinsurance deals and were routinely oversubscribed in the first half of 2026. This followed three consecutive years of stellar ILS and reinsurance market returns, which has left capacity providers flush with capital, perhaps even more than they can hope to deploy prudently. “By underwriting and restructuring reinsurance deals at the onset of the hard market in 2023, capacity providers positioned themselves so that no cat events in the past three years have been able to dent their large buildup of retained earnings,” said Wai Tang, senior director, AM Best.

Growth in the ILS sector is being cited by market participants as a driver of softer reinsurance pricing at mid-year renewals, with that rate outpacing the increase in traditional reinsurance capital. Mid-year 2026 property catastrophe renewals reflected another orderly and increasingly buyer-friendly season, supported by abundant traditional and ILS reinsurance capital. “The supply of capital was estimated to have surpassed demand by over 25%, driving further declines in reinsurance pricing,” said Matt Tuite, director, AM Best. “Capacity providers are finding market conditions attractive and are willing to accept lower prices to assume these risks.”

Catastrophe loss activity in 2026 has remained relatively manageable, with attention now on the North Atlantic hurricane season. The report cites a key question facing the ILS market heading into the January 2027 renewals – to what extent further pricing adjustments may occur, assuming catastrophe loss activity remains relatively benign through the balance of 2026.

The 144A property cat bond market broke another issuance record for the first half of the year, with USD 17.3 billion of total issuance. A high volume of maturing cat bond capital and retained earnings were redeployed into current year issuances, as new capital also flowed into the market, driving issuance to another first half record. Second quarter 2026 issuance of USD 11.3 billion broke the record for quarterly issuance previously 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 cat bond market, which demonstrates the rapid growth the market has experienced in recent years,” Tang said.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=367915.

For global reinsurance reports ahead of Rendez-Vous de Septembre, as well as video coverage of the event, please visit AM Best’s Reinsurance Information center.

Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 6, 2026, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit the event website.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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