HCMA sees continued growth in cat bonds & sidecars as ILS space moves into 2026: Rosenberg

As the insurance-linked securities (ILS) market continues to expand, Howden Capital Markets & Advisory (HCMA) expects to see a continuation of growth in the catastrophe bond space, alongside continued opportunities in property catastrophe-focused sidecars and growing interest in casualty sidecars, Mitchell Rosenberg, Global Co-Head of ILS told Artemis in an interview.

Speaking with Artemis at the Monte Carlo Rendez-vous event, Rosenberg shared what HCMA’s outlook is for the global ILS sector as the industry begins to move into 2026.

“HCMA looks at ILS quite broadly. In the cat bond market, we expect a continuation of growth in terms of new sponsors, first time sponsors, and previously dormant sponsors. That growth will come from new product and structures and an increase in the Cat Bond market’s contribution to overall risk transfer strategies,” Rosenberg told Artemis.

He added: “We also see the continuation of unique property cat-oriented type sidecars, such as HCMA’s E&S sidecar brought to market for the first time two years ago. So, there’s a new wave of proportional sidecar capital markets opportunities in the ILS market.

“And then the additional pillar being the casualty or whole account sidecar side of the equation, where there’s a new pool of investor interest that’s actively participating in the ILS market providing strategic partnership opportunities for insurers and reinsurers.”

2025 has already been an exceptional year for the catastrophe bond market. Artemis’ data shows that total cat bond and related ILS issuance in just the first six months of 2025 almost broke the annual record set in 2024 of $17.7 billion. New records were also set for 144A property catastrophe bonds and for overall 144A catastrophe bond and related ILS issuance.

However, the total cat bond issuance record was broken soon after July 1st and at $18.6 billion at the time of writing, according to Artemis’ data, is on track to hit and exceed the $20 billion mark.

Rosenberg highlighted three key pillars that are driving the increase in sponsor activity.

“Firstly, there were repeat sponsors, or those who have been active in the cat bond market for several years. Secondly, there’s been issuances from those who have been somewhat dormant, so they were active ten years ago, and recently returned. And thirdly, you have first time sponsors who have historically been inactive in the cat bond market previously, who have entered into that space.”

He continued: “In terms of what’s driven that activity, there’s a recognition across the entire market that’s from intermediaries, capital providers, insurers, and reinsurers, that the ILS more broadly is core to the overall reinsurance ecosystem and a meaningful way to diversify capital sources and establish additional trading partners. That’s one side of the equation.

“The other side, which is how do we ensure that growth is able to be met, which boils down to the capital side. We observed that the market has performed well from a return perspective, both in the near term and overtime—even amidst an active natural catastrophe environment Principally, and perhaps most importantly, the asset class has continuously demonstrated its diversification qualities and benefits against broader financial markets.

“The cat bond market is certainly recognised as being a core, integral part of the overall insurance/reinsurance ecosystem, and its critical to be part of insurers and reinsurers purchasing strategies.”

Turning to casualty sidecars, Rosenberg explained how HCMA sees them as a natural extension of its ILS strategy.

“It fits well within Howden Capital Markets and Advisory’s platform and expertise, where these transactions require complex and technical capabilities across insurance and capital markets.

“But we’re approaching that in the same way that we approach the cat bond component, which is this is a growing integral part of the overall reinsurance ecosystem, and our clients should evaluate along with their broader reinsurance objectives,” Rosenberg explained.

Lastly, Rosenberg pointed to liquidity as both a benefit and a challenge for the global ILS market today.

“One of the benefits of the ILS market, and the cat bond market more specifically, is the ability to provide liquidity.

“One key opportunity and challenge is how to further develop liquidity across the ILS market; this will not only help shape the future of the market, but can also help increase investor appetite.”

Rosenberg concludes: “As has been the case on the Cat Bond side, the sidecar market (both property and casualty) have the opportunity to show proof of concept around returns and structure, which can add trust confidence to sponsors and investors.”

Read all of our interviews with ILS market and reinsurance sector professionals here.