Significant ILW interest at mid-year renewals. Very active cat bond market expected in Q4: SCOR IP

Demand for industry-loss warranty (ILW) protection saw progressive momentum throughout Q2 2026, culminating in a peak during the mid-year reinsurance renewals. At the same time, after a record opening half to the year, catastrophe bond activity is expected to be very active in Q4, a new commentary from SCOR Investment Partners has highlighted.

ILW market activity tends to pick up at the mid-year renewals, given that this period immediately precedes the peak of the North Atlantic wind and hurricane season, and both insurers and reinsurers often use this time to calibrate and expand their catastrophe and retrocessional portfolio’s.

Reflecting on this year’s June and July renewals, SCOR Investment Partners noted that there was significant interest in purchasing ILW protection against US hurricane and US earthquake.

The firm explained that premium rates were flat on average compared to the beginning of the year with no changes seen within terms and conditions.

Meanwhile, on the private reinsurance side, the outcome of the June and July renewals in the US saw a 15 to 20% reduction in premium rates year-on-year, in the context of abundant capacity available. As the firm explains, this reflects continued rate normalisation on the back of the January and April renewals.

As mentioned, the opening half of 2026 was a considerably busy period for the catastrophe bond market.

Artemis’ data shows that nearly $11.33 billion of total issuance across Rule 144A and private cat bond transactions were recorded in Q2 2026. As a result, this brings the total volume issued in H1 2026 close to $18 billion, setting a new record for the period above the $17 billion issued in H1 2025.

For a detailed look at Q2 and H1 2026 catastrophe bond market activity download our latest report here.

The cat bond market will now quieten down throughout the third quarter and will likely not reopen before the end of September/early October, which is usually what happens every year, as attention turns towards US hurricane and Japan typhoon activity during the summer.

“According to market expectations, Q4 should see a very active primary market, which could lead the market to break last year’s full year record of USD 25 billion,” SCOR Investment Partners said.

In addition, the firm also highlights how the latest forecasts for the 2026 hurricane season indicate well below average activity. However, its important to remember that these forecasts are mainly based on a very high likelihood of very strong, if not record, El Niño conditions throughout the summer and autumn.

In another recent commentary published by SCOR Investment Partners, the firm observed that while outlooks for this year’s season appear to be more positive compared to more recent years, ILS portfolio construction still remains focused on diversification and resilience, with a key objective of maintaining a high level of shock‑absorption capacity.

“Cat bond spreads may soften in the short term as the result of these forecasts. Like every year, the evolution of cat bond spreads in Q4 and year-end reinsurance renewals will depend on the actual hurricane activity and actual losses to the (re)insurance and ILS markets,” the firm added.