Investor appetite supports re/insurer race to secure ILS coverage

DUBLIN, Aug. 28, 2025 - Aon plc (NYSE: AON), a leading global professional services firm, today published the 19^th edition of its Insurance-Linked Securities (ILS) Annual Report – September 2025, which reveals that catastrophe bond issuance surpassed $21 billion during the most active 12-month period in the history of the ILS market. At the same time, sidecar capacity increased to an estimated $17 billion across both property and casualty lines.

Analysing the 12-months ending June 30, 2025, the report highlights that total outstanding catastrophe bond volume had reached a record $55 billion by the end of the period, representing a 19 percent increase compared to June 30, 2024, and emphasising the market’s continued expansion and resilience.

The first half of 2025 witnessed the structuring of 56 catastrophe bonds with an issuance total of $17 billion, matching the issuance total for full year 2024 in just six months. Average deal sizes increased, with H1 2025 transactions averaging $302 million – a 12 percent rise compared to H2 2024.

The heightened catastrophe bond activity was representative of growth in the broader ILS market, where alternative capital had reached a record $121 billion by June 30, 2025. Sidecars continued to grow due to their relatively high underlying margins and the advent of the casualty sidecar product, which now accounts for approximately eight percent of the overall sidecar market.

The ILS Annual Report reveals that catastrophe bonds generated a return of 14.1 percent for investors over the 12-month period under review, based on the Aon Securities Catastrophe Bond Total Return Index. Overall losses from Hurricanes Beryl, Helene and Milton, alongside record-setting California wildfires were manageable for investors, indicating the general remoteness of the ILS product offering. 

The report further highlights three dominant trends in the catastrophe bond sector:

• Insurer participation increased significantly to 58 percent of total catastrophe bond issuance, driven by rising capital requirements linked to model changes and a growing appetite for diversified, multi-year coverage.
• Regional concentration intensified, with 93 percent of new issuances covering North America perils – reflecting investor comfort with U.S. risk models and the appeal of broader risk margins.
• Florida-focused issuances increased to a record $5 billion – a 46 percent increase over the prior year period and representing 16.6 percent of the total outstanding catastrophe bond market, highlighting investor confidence in peak-zone protection.

Catastrophe bond maturities increased to $12.9 billion during the period under review. Much of the associated capital re-entered the sector, with 52 repeat clients and 13 new entrants contributing to a record client count and signalling strong investor demand for the elevated yields and attractive risk spreads available in the marketplace.

Richard Pennay, CEO of Aon Securities, said: “Driven by higher building costs, evolving weather trends and the push to close the protection gap, cedents are increasingly seeking coverage beyond what is available in the traditional reinsurance market. With the uncorrelated nature of catastrophe bonds, and investors achieving double digit returns, the space continues to demonstrate its value and outpace growth in other areas of the insurance industry.”

The full Aon Securities ILS Annual Report – September 2025, is available at Aon Securities 2025 Annual Report

For more information about Aon’s Reinsurance Solutions, please visit: https://www.aon.com/home/solutions/reinsurance.html

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

Follow Aon on LinkedIn, X, Facebook and Instagram. Stay up-to-date by visiting Aon’s newsroom and sign up for news alerts here.

Aon UK Limited is authorised and regulated by the Financial Conduct Authority for the provision of regulated products and services in the UK. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN. Tel: 020 7623 5500. FP #13191 has been approved until August 27^th, 2027, after which time the content should not be used or distributed.

Media Contact
Andrew Wragg
+44 (0) 7595 217168
andrew.wragg@aon.com