While the mid-year renewals offered some pricing relief, many small- to medium-sized US insurers still find traditional reinsurance costly in certain cases, prompting them to explore alternative sources of capacity such as catastrophe bonds according to AM Best.The rating agency said in a new report that the small- to medium-sized US domestic insurers issuance category has continually grown over the last several years.Looking at the chart below, you can see that the leap from 2024 to 2025 was particularly significant as the market share increased from 21.2% to 35.2%.The chart also shows that small- to medium-sized US domestic insurers now has a bigger share than other sponsor categories, which includes government backed, Japanese, European & Bermuda primary carriers, & Others, large nationwide US primary insurers, and retro.

AM Best utilised Artemis’ data on the catastrophe bond market, including our extensive where you can analyse details of almost every cat bond ever issued.Furthermore, AM Best also noted that there has been a sizeable decrease in market share from the previous years (2022 and prior) for the retro category, which perhaps suggests the greater availability of retro capacity from other sources.All other categories had minimal decreases from 2024.

“Despite some elements of pricing relief at the mid-year reinsurance renewals, small-to medium-sized insurers still find traditional reinsurance to be expensive in particular cases, which motivates them to seek out other forms of capacity,” AM Best said.Adding: “As a result, small- to medium-sized insurers are now turning to the capital markets and sponsoring catastrophe bonds, which allows them to gain access to a wide range of investors, and the insurers, in turn, can get fully collateralized multi-year reinsurance.“ The agency went on to state that across 2025, there is a clear trend developing with many issuances offering more tranches in comparison to previous years.

The most noticeable sector is the small- to medium-sized US domestic insurers category, where multiple sponsors had two tranches, or in one case, five different tranches, AM Best explained.“There is clearly a focus to target a broad range of investors with specific risk appetites.The expectation is for this trend to continue as sponsors will group their risk classes to attract investors that target investments with specific risk profiles,” the agency added.

Turning attention now towards Florida takeout companies, where these particular firms face many risks in the volatile Florida market, the agency explained that weather events and the high costs of traditional reinsurance have forced the takeout companies to turn towards the capital markets as another way to transfer risk.As AM Best affirms, the takeout companies themselves have “significant reinsurance capacity needs.” “The goal of the depopulation effort by takeout companies is to return policies back to the private market, and to facilitate this process, takeout insurers must have adequate reinsurance options available to them,” the agency added.AM Best continued: “In 2024 and 2025, there were 73 separate approvals (many companies had multiple approvals) of takeout companies by the Florida Office of Insurance and Regulation.

Many of the private carriers involved in the takeout program are also turning to the capital markets to mitigate and manage low-frequency and high-severity cat risks.” AM Best also recently highlighted how record levels of catastrophe bond market issuance in 2025 are reshaping the pricing landscape, with the rating agency .We track , the most prolific sponsors in the market, most active , which risk modellers feature in cat bonds most frequently, plus much ., or via the  which provides a handy one-page view of cat bond market metrics..

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