Catastrophe bonds and sidecars set new records in annual capital deployment

DUBLIN, Aug. 28, 2026 - Aon plc (NYSE: AON), a leading global professional services firm, today published the 20^th edition of its Insurance-Linked Securities (ILS) Annual Report – August 2026, which found that alternative capital reached a record $144.5 billion, representing an annual growth rate of approximately 8.3% over the past five years.

Analysing ILS market activity during the 12-months ending June 30, 2026, the Aon Securities report found catastrophe bond issuance reached $24.9 billion, the highest 12-month total on record and 15% above the previous record of $21.8 billion. Outstanding catastrophe bond volume reached a record $63.4 billion, up 17% from June 30, 2025, reflecting an estimated 11.6% compound annual growth rate over the past decade.

ILS now spans all property and casualty insurance lines, supported by the continued development of asset-intensive sidecars, which typically include casualty lines or whole-account structures. Aon estimates outstanding sidecar capital reached $23 billion across both property and casualty lines, approximately 50% higher than year-end 2024, driven by strong margins and growth in casualty-focused sidecars.

Richard Pennay, CEO, Aon Securities, said: “The past 12 months marked an important milestone for the ILS market as it continued to evolve into a source of foundational reinsurance capital for clients globally. As the market expands across additional risks and products, it is providing clients with another source of durable capital while continuing to attract investor interest.”

A record 78 sponsoring entities accessed the catastrophe bond market during the period under review – including 16 first-time issuers, underscoring its growing role in risk transfer strategies. Insurers were the largest issuers by group (65%), followed by reinsurers (17%), governments (16%) and corporate entities (1.5%). The market also continued to expand beyond traditional North American peak perils to include wildfire, European flood and convective storm, sovereign disaster relief and other specialized risks.

Catastrophe bonds generated a return of 12.5% for investors during the 12-month period under review, based on the Aon Securities Catastrophe Bond Total Return Index, with coupon income remaining a key driver of investor returns and reinvestment.

The report further highlights other dominant trends in the catastrophe bond sector, including:

• Regional concentration eased slightly. North America perils still accounted for 90.1% of issuance, reflecting investor confidence in U.S. risk models and broader risk margins.
• Catastrophe bonds predominantly used indemnity triggers (80.9%), followed by industry index triggers (16.5%), parametric solutions (2.4%) and dual triggers (0.2%).

Looking ahead, Aon expects clients to continue seeking diversified, multi-year sources of capital across a wider range of risks and products, while investors remain focused on disciplined underwriting, transparency and appropriate risk-adjusted returns.

The full Aon Securities ILS Annual Report – August 2026, is available at https://aon.io/ils-2026

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

About Aon

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Media Contact

Andrew Wragg

+44 (0) 7595 217168

andrew.wragg@aon.com