Cat bond market poised for another strong year in 2025: Brad Adderley, Appleby

Following a record year for the catastrophe bond market in 2024, with issuance increasing by over $1 billion to a new annual high of $17.7 billion, 2025 is set to be another busy year for the market, according to Brad Adderley, Partner at global law firm Appleby.

Artemis spoke with Adderley ahead of the launch of our Q4 and full year 2024 catastrophe bond and related insurance-linked securities (ILS) market report.

Annual cat bond issuance increased to a record $17.7 billion as the extremely active first half of the year and final quarter more than offset a quiet third quarter for the space.

This marked the second consecutive year in which annual cat bond issuance managed to set a new record, as well as being another year which saw activity levels swell in the final quarter ahead of the key January 1st reinsurance renewals.

Reflecting on this, Adderley discussed with Artemis what to expect in the cat bond market in the opening months of 2025.

“Clearly, issuance in 2024 has been very impressive and strong. But, is 2025 going to be busy? All I can tell you is that every day we are sending out a quote for a new cat bond. It’s crazy, and it’s showing no sign of slowing down,” he explained.

We’re now in February, and cat bond activity so far in 2025 has been very strong, and is already on track for record first-quarter issuance, according to data from the Artemis Deal Directory.

Back to Q4 and full year 2024, and much like any asset class, the cat bond market continues to demonstrate a strong balance of supply and demand, with deal sizes and final pricing of cat bond notes in the last quarter of 2024 reflecting sustained investor interest.

Additionally, nearly all cat bond tranches issued during the period were upsized during marketing, while the large majority of notes issued also priced below midpoint of initial guidance, by as much as 20% in some cases, which clearly points to strong demand from the investor base.

Addressing this, Adderley said: “So, what we’re seeing is a flooding of the market, but as there’s also better investors in the market to buy the product, the issuers can decrease price because everyone is saying please give it to me, please give it to me. And, by doing that, the sponsors keep on saying, I’ll give you a lower quote.”

He continued: “Really, it’s just in a constant cycle. We saw at the start of last year a couple of cat bonds failed to get over the line, and let’s be honest, the prices are never too low. So, again, it’s just a constant cycle between supply and demand. And, let’s not forget that one or two of the largest ILS players in the market now are just cat bond funds, so they must be all over every single transaction.”

Adderley also stressed that the anticipated “crazy” start to 2025 will also be characterised by new life reinsurer formations and sidecars for life, casualty or general business.

He explained: “I have enough new formations that will slip into the new year along new structures waiting to be started which will begin in January and submitted soon thereafter.”

Interestingly, Adderley believes that the cat bond market is going to see a lot of new issuances and structures throughout 2025, as well as announcements of sidecars too.

“So, for me, I see as many interesting, complicated, transactional structures in the first two months of 2025. Whether or not March is busy or quiet, we’ll have to wait and see,” he concluded.

All of our catastrophe bond market charts and visualisations are up-to-date, so include this latest quarter of issuance data.

We will keep you updated on all catastrophe bond and related ILS transaction issuance as 2025 progresses, and we’ll report on the evolving trends in the cat bond, ILS and collateralised reinsurance market.