2025 was a banner year for cat bonds, and the first quarter of 2026 was the market’s best ever.
In January of this year, we shared a reflective post looking at 2025’s successes and made our predictions for 2026. One trend we anticipated was an increase in new issue sponsorships, and a number of recent announcements have already helped validate that prediction.
First, military mutual insurer USAA secured its largest-ever cat bond sponsorship with the Residential Reinsurance 2026 Limited (Series 2026-1) cat bond at an impressive $825M - up from its original target of $600M. That amount alone is noteworthy, but it’s also important to understand what the sponsorship covers, including a variety of perils in addition to hurricanes, such as tropical cyclones, earthquakes, severe thunderstorms, winter storms, and wildfire. This points to continued increase in the diversity of cat bonds, as insurers look for coverage that spans a wide range of disastrous events.
USAA is not the only banner insurance brand betting big on cat bonds. Allstate added more protection to its per-occurrence Nationwide Excess Catastrophe Reinsurance Program, reaching a new high of $11.5 billion, while also securing another $1 billion aggregate excess reinsurance arrangement as well. This was after they raised the tower to its previous high to $9.5B just last year and sponsored its largest cat bond issuance ever, the $1.2 billion sponsorship of the dual issuance Sanders Re cat bonds, in February of this year.
Finally, global reinsurance giant Swiss Re is back to sponsor its second issuance of 2026, with an initial target to secure $250 million of US named storm per-occurrence based retrocessional protection through a Matterhorn Re Ltd. (Series 2026-2) transaction. This comes after it secured $150 million of annual aggregate retro reinsurance from a Matterhorn Re 2026-1 cat bond in February.
What does all of this mean for cat bond investors? It demonstrates insurers’ reliance on the cat bond market as a core component of its reinsurance strategy, and signals continued confidence in cat bonds as an asset class, with more issuance and more opportunities.
Cat bonds aren’t just getting big-name backing, they’re also continuing to grow in popularity outside of the U.S. In April, the Asian Development Bank issued its first cat bonds securing $160M in coverage for parametric earthquake and precipitation disaster risk in the Kyrgyz Republic and Tajikistan. Recently, Portugal shared an economic recovery plan that could support a cat bond to sustain ongoing losses due to severe weather and wildfires.
We also want to call-out what we see as another interesting development. The Government of Jamaica, with support from the World Bank, is targeting $150 million of parametric named storm and hurricane protection from an IBRD CAR Jamaica 2026 issuance to replace the coverage that was triggered after Hurricane Melissa in October 2025.
For the cat bond market, Hurricane Melissa provided a real-world example of how effective they can be in the ability to provide immediate capital to disaster recovery efforts as they were triggered by highly specific, pre-determined parameters when disaster struck. Given the Government of Jamaica’s previous success with cat bond coverage, we can look to this as another vote of confidence that cat bonds work and are a highly desirable form of reinsurance.
Real word examples can give investors the validation they need when considering cat bonds as an addition to their portfolios. Given the proof points above, one can argue that cat bonds work and that increasingly more institutions are counting on them – including some of the largest insurance companies in the world. Industry developments like these can shine the brightest light on how the cat bond market is growing and continuing to evolve. We believe this should continue to reassure investors who might feel understandably unfamiliar with investing in cat bonds as an asset class, given that, until somewhat recently, accessing cat bonds was largely reserved for large and sophisticated institutions.
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Sources:
Artemis
Brookmont