The continued scaling of alternative, or third‑party reinsurance capital further augmented property catastrophe capacity and increased competitive pressure at the January 2026 renewals, according to S&P Global Ratings, who projects that alternative capital will continue to reach new highs as it complements traditional reinsurance capital.
“The continued scaling of third‑party capital further augmented property catastrophe capacity and increased competitive pressure, particularly for programs with favourable recent loss experience, at the January 2026 renewals,” S&P said.
Adding: “We expect alternative capital to continue reaching new highs as it complements traditional capital. We expect both traditional and alternative capital to keep growing, supporting a well‑capitalized reinsurance market in 2026.”
Analysts also said that alternative capital remains a “central component” of the property catastrophe market, as it complements cedents’ reinsurance protection needs.
“It has continued to expand steadily over the past two decades, from less than 5% of global reinsurance capital in 2006 to more than 16% in 2025. New inflows–led by record catastrophe bond issuance and renewed activity in sidecar structures that increasingly span both property and casualty lines–fueled this growth,” S&P said.
As readers are aware, catastrophe bond market activity in 2025 resulted in a record-breaking year for the sector, with it being the first year to see over $20 billion of cat bond issuance.
Total issuance across Rule 144A and private cat bond transactions tracked by Artemis reached over $25.6 billion in 2025, beating the previous record of just under $17.7 billion which was set a year earlier in 2024 by a staggering 45%.
Including all 144A cat bonds and the private cat bond deals we track in our extensive Artemis Deal Directory, the outstanding catastrophe bond market ended 2025 at a record size of just over $61.3 billion.
S&P outlined that investors continued to favour catastrophe bonds throughout 2025 due to their favourable structural features, clearer coverage definitions, and greater liquidity relative to other alternative reinsurance vehicles such as collateralized reinsurance, sidecars, and industry loss warranties.
Looking past cat bonds, analysts also highlighted how the sidecar market continued to gain momentum throughout last year.
“New investors and new structures supported the expansion, with casualty sidecars estimated at $1.7 billion of invested capital and property sidecars at $17.9 billion. The property sidecar market remained resilient although the pricing cycle has passed its peak,” S&P explained.
As a reminder, you can find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.
In addition, S&P also flagged how collateralized reinsurance remained a “material component” of third-party capital capacity throughout last year.
Collateralized reinsurance has been heavily supported by continued commitments from investors, combined with the release of capital previously constrained by prior-year loss activity. However, analysts noted that investor appetite remains concentrated among experienced sponsors with established underwriting frameworks, disciplined risk selection, and strong risk‑modeling capabilities.
