Click here to view the Artemis Q2 2025 Catastrophe Bond & ILS Market Report.
It's been an exceptionally busy and record first half of the year for the catastrophe bond sector, with a number of first-time sponsors entering the market. This momentum, according to Brad Adderley, Bermuda Managing Partner at Appleby, reflects how education has "helped" investors get more comfortable, ultimately enabling the insurance-linked securities (ILS) sector to continue its growth trajectory.
Speaking with Adderley, we asked for his perspective on how a softening reinsurance market could influence demand for various ILS structures, as issuance in the cat bond space in the first half of 2025 hit new heights on the back of a record Q1 and Q2.
"You obviously have more ILS funds who are focusing solely on cat bonds. There are so many major players out there in the market now, which have become very large.
"I also think it's a case of year-on-year education catching up. Investment bankers and brokers have been talking to people for a long time, and all that time and effort is finally paying off, with more market participants getting involved."
When we last spoke to Adderley around the launch of our Q1 2025 cat bond and ILS market report, he suggested that the momentum being seen within the market was not going to slow down.
Adderley was spot on, as a total of eight new sponsors made their debut in the cat bond market in Q2 2025.
According to Adderley, this continued growth is a testament to the efforts of investors, arrangers, brokers, and bankers over the years.
"It starts compounding. It's been building, and I think that's what we're seeing now. I think every year it seems to multiply. One becomes two, two becomes three and a half, then there's a jump and three and a half becomes seven, and seven becomes nine, and then nine becomes 18.
"I also believe the education of understanding the market is better for the new and first-time sponsors. They're not scared about it even when you take into account the amoun tof documentation that goes into a cat bond... the consistent education really helps these first-time sponsors understand the market a lot better too."
Looking ahead to the second half of 2025, we asked Adderley whether he sees signs of capital raising among ILS funds, and whether he anticipates significant activity before year-end.
"I recently asked this question to a client of mine about raising of capital. I personally have not heard any great stories of someone raising let's say $400 million or $500 million of real capital.
"Have I heard of attempts to raise $50 million or $100 million? Yes. Have they succeeded? No.
"But if capital is raised, do I think it would go into ILS? Yes, I do.
"I think we've seen over the last couple of years, with the exception of Mereo, that it's hard to raise capital for a rated balance sheet. The ILS funds or investing through an ILS platform on a bespoke basis seems to be obviously easier, it's obviously quicker, it's obviously cheaper. I think we'll see that."
Based on how the market has performed so far this year, with the issuance of cat bonds that have settled in the first half of this year at $17.6 billion, which is just $133 million below the annual record for issuance, we asked Adderley about the likelihood of the market surpassing the record $20 billion figure this year.
"Are we going to do more than $3 billion? The answer is yes, because I don't know what's going to stop the momentum.
"At the very least, we'll hit the average, and given how close we are, how could we not? I think we'll get there," said Adderley.
Click here to view the full report.
Originally published by Artemis, July 2025
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