LowVII Reinsurance & Specialty Risk23 October 2026, Friday
Catastrophe bond market heads for a second 20 billion dollar year
Artemis data show 18.92 billion dollars of catastrophe bonds (bonds whose principal passes to the insurer when a disaster is triggered) issued in 2026 as of 23 October. With about 1.3 billion dollars of deals in the pipeline, the total is expected to reach 20.22 billion dollars in the week of 9 November; in 2025 that mark was only passed on 25 November.
The third quarter set no record but stayed above average, with 948 million dollars issued across 10 deals. European reinsurers brought the two largest: Swiss Re's 345 million dollar Matterhorn Re and Hannover Re's 200 million dollar 3264 Re. Outstanding market size reached 65.5 billion dollars at quarter-end, up 7% on the end of 2025. An annual record would need about 6.7 billion dollars of issuance in the fourth quarter; the 2025 total was 25.6 billion dollars.
Pricing is working in issuers' favour. Artemis says pipeline deals are being upsized and their pricing cut, and UCITS catastrophe bond funds grew their assets by about 1 billion dollars in the third quarter. Together with traditional capacity, this capital is pushing prices down: Aon estimates industry capital at 800 billion dollars and sidecars at about 23 billion dollars. The crucial detail is that no issuance in the third quarter carried non-catastrophe risk, so this capital is not taking on war or cyber exposure.
Talay assessment
Bottom line
Capital markets keep buying the upper layers of programmes more cheaply than traditional reinsurance, one of the engines behind the broad price decline at 1 January. Yet this capital takes on almost no war, political violence or cyber risk. The most likely path is that the 20 billion dollar mark is passed in November and pricing in upper layers falls further.
Likely effects
- Reinsurance pricingUncertainWeeks
Upsized, cheaper issuance pulls down traditional reinsurers' pricing in the upper layers of programmes.
- War and cyber riskNegative1–6 months
The absence of non-catastrophe issuance shows that risks which cannot be modelled still fall only on traditional balance sheets and state pools.
Possibilities, ranked
- 1Mark passed, annual record missed55%
Issuance passes 20 billion dollars in November, but fourth-quarter issuance stays below 6.7 billion dollars.
Watch: Artemis's year-end issuance total against the 25.6 billion dollars of 2025
- 2Annual record broken30%
Deals aimed at the January renewal make the fourth quarter one of the strongest on record.
Watch: Fourth-quarter issuance exceeding 6.7 billion dollars
- 3Late-season shock slows issuance15%
A major catastrophe dents investor appetite, and pipeline deals are downsized or postponed.
Watch: Pipeline deals being downsized or postponed in November
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- 2026 cat bond issuance▲ $18.92bn
- Outstanding (end-Q3)▲ $65.5bn