Primary catastrophe bond market activity is set for a strong final quarter in 2026, driven by expectations for a strong pipeline and how the lower spread environment may encourage more sponsors to enter the market, according to Sidney Rostan, Head of ILS Strategies at SCOR Investment Partners.
In a new commentary reflecting on the insurance-linked securities market’s performance in Q3 2026, Rostan highlighted that there were no meaningful insurance losses during the period, in what he described as “a very quiet US hurricane and Japan typhoon season, with no impactful landfall to be mentioned.”
“Like every year, the primary cat bond market became relatively quiet during the summer, with no transaction issued. This brings the YTD cat bond volume issued to approximately USD 18.5 billion as of the end of Q3 2026, slightly above volume issued during the same period in 2025,” Rostan said.
“In the absence of any threats in the tropical waters, the secondary cat bond market remained quiet during the summer, with only limited volumes traded. In this context, prices moved up significantly, driven by the customary seasonality effect which is at its strongest during the height of the hurricane/typhoon season.”
However, if we include the secondary market too, Artemis’ data shows that total catastrophe bond issuance for the first nine-months of the year set a new record of $18.9 billion.
Download your free copy of Artemis’ Q3 2026 Cat Bond & ILS Market Report here, where you can read more details, including a breakdown of deal flow by features such as perils, triggers, expected loss, and pricing, as well as analysis of the issuance trends seen by month and year.
Rostan further added: “In this environment, Q4 2026 is expected to see a very busy primary market according to discussions with cat bond structurers, as the lower spread environment will encourage potential cat bond sponsors to issue bonds in the context of a continuously increasing demand for protection.”
Given this, the executive underscored that total primary cat bond market activity could break last year’s full record of $25 billion.
Rostan also added that cat bond spreads are expected to come down slightly in the fourth quarter, emphasising that the high level of primary market issuances should sustain spread levels but should be well met given the level of capacity that’s currently available in the market.
Moving beyond the cat bond market, at both the June and July reinsurance renewals in the United States, rates continued their differentiated decline, with sharper reductions seen on quality cedents’ occurrence layers and more moderate decreases on aggregate and working layers, which resulted in a -15% to -20% risk-adjusted rate change YoY.
Following this year’s Rendez-Vous de Septembre in Monte Carlo, Rostan highlighted that well-capitalised markets are setting the stage for a shifting negotiation dynamic, pointing out that participants are expecting further, though more moderate softening in property catastrophe reinsurance pricing at the January renewals, and that negotiations are likely to extend beyond pricing, with terms and conditions as well as attachment levels expected to be key areas of focus during renewal discussions.
Lastly, Rostan also highlighted that the industry loss warranty (ILW) market remained quiet during Q3 2026 with no noticeable pricing changes seen during the period.
