Andrew Newman, President of global reinsurance broker Gallagher Re, said today that if the firm’s pipeline is any indication of catastrophe bond market activity in the final quarter of 2025 and the first half of next year, “we won’t be surprised to see a fourth record-breaking year of issuance.”
He highlighted that catastrophe bond issuance hit record levels of more than $17 billion at July 1st, 2025, confirming that Gallagher Re expects issuance for the year to reach the $20 billion milestone.
2025 is the third consecutive year of record cat bond issuance, and Newman suggested that momentum will be sustained in 2026.
“If our own pipeline is any indication of market activity in Q4’25 and H1’26, there’s no reason to assume that you won’t see the same trend continuing next year,” he said. “It’s a bit early to talk about records, but as I said, if our pipeline is any indication of market activity, we won’t be surprised to see a fourth record breaking year of issuance.”
Artemis’ data shows that total cat bond and related ILS issuance in just the first six months of 2025 almost broke the annual record set in 2024 of $17.7 billion, while new annual records were set for 144A property cat bond and total 144A cat bond and related ILS issuance. The total cat bond issuance record was broken soon after July 1st and at $18.4 billion at the time of writing, according to Artemis’ data, is on track to hit and exceed the $20 billion mark.
But Newman’s comments are very interesting, as he suggests that Gallagher Re’s cat bond pipeline points to a real possibility for another record year in 2026, while it remains unclear just how high issuance gets this year with one month of Q3 left and then the final quarter of the year, which is typically more active given the proximity to the January renewals.
Going forward, Newman said that the reinsurance broker expects “downward pressure on risk spreads,” noting that “cat bond pricing continues to soften at a greater rate than the traditional market.”
“And the cat bond space also continues to benefit from a very robust supply of capital and sustained investor flows. This momentum is driven by the excellent returns delivered over the past several years, which largely have been reinvested into the space,” continued Newman.
In terms of the secondary market, Newman explained that while activity remains elevated as managers actively deploy excess capital, this has resulted in downward pressure on spread levels.
“The fact is that pricing remains attractive to highly attractive compared to historical benchmarks, with room for further softening,” he said.
Gallagher Re’s President also noted that although capital allocations in the space do continue to favour the liquid cat bond products, “there is no shortage of capital in the collateralized reinsurance market, and market dynamics could and would shift if the pricing differential between the two segments widens much more.”
“Inflows represent long-term strategic allocations from end investors. However, a significant amount of capital remains on the sidelines, poised, tactical deployment in the event of a large loss. This readiness highlights this market’s ability to recapitalise swiftly and effectively post-event, and despite being in a market where as we’ve heard supply/demand dynamics favour buyers, strategic optionality and diversification of supply are important to many clients, given the supply side disruption they experienced in 2023,” he continued.
“In summary, the cat bond space is fairly well positioned for growth, strong investor demand. But the sidecar space, as I might have suggested, is perhaps the more strategically interesting, at least from my perspective.
“I’m hesitant to say that there are pools of almost infinite capital seeking insurance risk as an asset class, but I don’t think I’m that far wrong. And while the life insurance space is not a direct proxy for the non-life space, given the different volatility dynamics, that third-party capital has, in several developed markets, seen and driven a separation in the life insurance value chain between origination and capital intensive balance sheet management. We may or may not be in the foothills of a similar strategic pivot in the non-life space, we’ll see in the coming years,” concluded Newman.
