According to the report, catastrophe bonds followed the trend seen across many traditional reinsurance deals, with transactions routinely oversubscribed in the first half of 2026.
Following a busy first quarter, strong catastrophe bond and broader insurance-linked securities (ILS) issuance momentum continued into the second quarter, with a quarterly record of more than $11.3 billion issued across a record 48 transactions, according to the Artemis Q2 2026 Catastrophe Bond and Related ILS Market Report, available to download here.
“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,” AM Best explained.
Notably, the 144A property cat bond market broke another issuance record for the first half of the year, with $17.3 billion of total issuance.
Read more on these transactions in the Deal Directory of our sister publication, Artemis, which contains information on more than 1,000 cat bonds and related ILS transactions issued since the ILS & cat bond market began in the mid-1990’s.
AM Best said that a high volume of maturing cat bond capital and retained earnings were redeployed into current-year issuances, while new capital also flowed into the market, driving issuance to another first-half record.
Wai Tang, senior director, AM Best, commented, “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.”
As noted, market participants cite growth in the ILS sector as a driver of softer reinsurance pricing at mid-year renewals, with that rate of growth outpacing the increase in traditional reinsurance capital.
The rating agency added, “Mid-year 2026 property catastrophe renewals reflected another orderly and increasingly buyer-friendly season, supported by abundant traditional and ILS reinsurance capital.”
Matt Tuite, director, AM Best, said, “The supply of capital was estimated to have surpassed demand by over 25%, driving further declines in reinsurance pricing.
“Capacity providers are finding market conditions attractive and are willing to accept lower prices to assume these risks.”
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