HCMA’s Rosenberg: Unpacking the rise in cat bond market momentum

Mitchell Rosenberg, managing director, co-head of global ILS at Howden Capital Markets & Advisory, explains how cat bonds have become a foundational pillar in modern (re)insurance strategies and why integration is key to driving innovation.

Describe the current role of cat bonds in the market.

Cat bonds are no longer an experiment and now sit at the heart of risk transfer strategy, which is the culmination of years of development. These instruments mobilize capital, diversify counterparties and help build resilience in an era defined by climate volatility and capital uncertainty. They have proven to be structural capital with staying power.

The cat bond market has expanded rapidly in recent years. What’s driving this momentum?

Cat bonds have become a core diversifying investment allocation, helping to fuel growth. Outstanding issuance volume has expanded from $35 billion in 2020 to over $50 billion in 2025, circa 10% of the global reinsurance market. The reasons for this are multifaceted.

For ILS managers and their clients, this shift is significant. It is creating more opportunities for portfolio construction, especially as the range of perils and risk-return profiles continues to expand. At the same time, the asset class continues to prove its diversification benefit against broader financial market activity.

For insurers and reinsurers, the asset class has consistently shown to be a reliable source of capital during market volatility. It has demonstrated that it is core to the reinsurance ecosystem, not just as an alternative but as a central component of diversifying capital sources and building new trading partnerships.

To that end, we are seeing repeat sponsors who have been active for years, dormant sponsors who might have last issued several years ago and are now coming back into the market, and a new and exciting wave of first-time sponsors entering the space. Across intermediaries, capital providers, insurers and reinsurers, there is a shared recognition that ILS is now a mainstream, strategic capital solution.

How do you see the liquidity landscape evolving?

As the ILS sector continues to grow, deepening secondary market liquidity remains both a challenge and an opportunity. Enhancing that liquidity is essential as it shapes the future of the market and plays a vital role in increasing investor appetite.

We also expect the cat bond market to continue expanding in both volume and diversity of product and structure. That evolution is going to bring in more investors and create new points of entry. Cat bonds are no longer an adjunct to traditional reinsurance.

What role is Howden Capital Markets & Advisory playing in this market evolution?

We have seen strong growth in our ILS franchise, particularly within the cat bond market. Since 2021, our cat bond issuance volume has increased by 727% and we currently account for around 14% of the outstanding market. That growth has come not only from supporting existing sponsors but also helping new entrants come to market.

A lot of our momentum comes from how we are set up. Our full-service investment banking platform brings together all arenas of capital markets and reinsurance expertise, which positions us to support clients in structuring and executing deals that make sense in a complex environment.

We also work directly with institutional investors to understand their appetite and build distribution strategies that broaden participation, which is particularly important as the market matures.

And by being integrated with Howden Re’s broader risk, analytics and placement capabilities, we are able to offer a joined-up approach that simplifies execution for clients. It is the integration of capital and reinsurance that is becoming increasingly relevant in this space.