Catastrophe-Bond Issuance Pushes Market Value To $50 Billion

Catastrophe-bond issuance reached record levels in 2024, boosting the overall market value to nearly $50 billion as insurers increasingly transferred climate-related risks to private investors, Gautam Naik reported for Bloomberg News.

Cat bonds offer investors potentially high returns in exchange for taking on insurance-market risk tied to natural disasters. I Photo: Twelve Capital AG

Sales of bonds providing supplemental coverage for disasters like hurricanes, earthquakes, and other events totaled $17.7 billion—7% higher than the previous record set last year—according to Artemis, a market tracker for insurance-linked securities.

The figures also include cyber-risk and private transactions.

“The cat-bond market had another year of strong growth,” said Tanja Wrosch, head of catastrophe-bond portfolio management at Zurich-based Twelve Capital AG.

“Larger, more diverse, and deeper markets are key to the success and sustainability of cat-bond solutions and investment strategies.”

Cat bonds offer investors potentially high returns in exchange for taking on insurance-market risk tied to natural disasters. If a predefined event occurs, bondholders face significant losses; if it doesn’t, investors can earn double-digit returns.

Insurers have increasingly embraced cat bonds, partly due to inflation driving up rebuilding costs for properties destroyed by storms and other disasters. Rising insured losses—fueled by climate change and more frequent extreme weather events—are also driving this trend.