With the catastrophe bond market growing at a rapid pace, the sector is well-positioned to support a broader sponsor base.The increased participation of large institutional investors, whose ability to deploy meaningful allocations remains a testament to the market’s credibility and scalability, further underscores this strength, Luca Albertini, CEO of Leadenhall Capital Partners LLP told us in an interview.Q3 2025 saw more than $1 billion of catastrophe bond and related ILS issuance recorded, lifting annual issuance to $18.6 billion at the end of the period.

This puts the market well on track to surpass the $20 billion mark for the first time ever.With the cat bond space growing at a substantial pace, Albertini discussed what the market needs to do as the sponsor-base grows, issuance accelerates, maturities increases, and overall activity continues to rise.“The catastrophe bond market is well-positioned to support a broader sponsor base and sustain the record issuance.

In recent years, the market has repeatedly demonstrated its capacity to absorb record levels of issuance without significant disruption to pricing or liquidity, underscoring both the depth and maturity of the ILS ecosystem,” Albertini said.“This resilience reflects a strong alignment between investor appetite for diversifying risk exposures and sponsors’ growing use of capital markets as a complementary source of reinsurance capacity.” While the cat bond market continues to expand, the increased participation of large institutional investors is particularly noteworthy.“Their ability to deploy meaningful allocations is a testament to the sector’s credibility and scalability,” Albertini explained.

“That said, we continue to see instances where these investors strategically time their market entry to optimise returns, which highlights an important growth opportunity: additional capital could be readily absorbed by the market, provided risk profiles and pricing remain attractive,” the CEO added.“Overall, the cat bond market has matured into a reliable and scalable capital source for insurers, reinsurers, corporate and government entities seeking risk transfer solutions.Its demonstrated ability to handle record issuance, coupled with ongoing innovation and deepening investor engagement, suggests it is well equipped to meet both the issuance and liquidity needs of a rapidly expanding sponsor base.” However, one key topic of discussion within the cat bond space has been the European Securities and Markets Authority’s (ESMA) recent recommendation not to allow cat bonds as eligible assets in UCITS funds.

Back in May, ESMA  eligible assets, seeking input from stakeholders to assess any possible risk and benefits of UCITS gaining exposure to certain alternative asset classes.In June, suggesting that some alternative assets such as catastrophe bonds may be better suited to a different framework than UCITS.“The ESMA recommendations not to allow cat bonds as eligible assets in UCITS funds should be strongly rejected and we support the European Commission’s decision to conduct its own consultation,” Albertini said.

“The ILS community must engage constructively and proactively to ensure the long-term viability of cat bonds as a wrong decision might affect a large proportion of the investments in the cat bond market,” the CEO concluded...All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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