Cat Bonds vs. Traditional Reinsurance – A Comparison of Market Trends and Performance

Robust growth in the cat bond market is ongoing in spite of increased capacities and the current normalisation of the reinsurance market. A historic high was reached in 2024 with an issue volume of USD 17.7 bn. An additional USD 7.1 bn was issued already in the first quarter of 2025, with cumulative volume rising by mid-year to more than USD 15 bn. Parallel to this, alternative reinsurance capital climbed to USD 115 bn, and total global reinsurance capital marked a new high of USD 715 bn. Against this backdrop, one can ask why primary insurers and reinsurers continue to opt for cat bond issues even as the market environment is characterised by high reinsurance capacities and falling prices.