Wildfire-exposed catastrophe bond issuance has surged to a record $5.183 billion year-to-date in 2026, indicating a significant increase in the amount of risk capital deployed to transactions with wildfire exposure. This rapid acceleration in issuance has been observed since 2022 and has continued into 2026, with 20 individual cat bond series already settled in the first half of the year, including mid-year deals closed in early July. This figure includes a couple of mid-year transactions, bringing the market close to the full-year record for wildfire-exposed bonds.
The overall catastrophe bond market has also seen record issuance, with total issuance exceeding $11.3 billion in the second quarter of 2026 and reaching almost $18 billion for the first half of the year, making it the second-largest half-year on record. Within this broader market, sponsors like Hippo’s Spinnaker Insurance unit and Liberty Mutual’s Mystic Re IV transaction have incorporated wildfire risk into their programs. Reinsurance broker Acrisure Re attributes this trend to better pricing, improved coverage design, and advancements in wildfire modeling, which have strengthened investor appetite.
The increase in wildfire-exposed cat bonds reflects a growing recognition of wildfire as the fastest-growing weather peril globally, as noted by the Swiss Re Institute. In 2025, insurers issued over $5 billion in cat bonds with some level of wildfire exposure, more than double the amount in 2024. A notable event was the California FAIR Plan, the state's insurer of last resort, entering the cat bond market in December 2025 with a $750 million issuance, Golden Bear Re Series 2026-1, which became the largest wildfire cat bond ever and a benchmark for the market. This move signaled that traditional reinsurance alone is no longer sufficient and that investors are now willing to price, buy, and hold wildfire risk.
Catastrophe bonds have also offered attractive returns, with a roughly 10.2 percent return over the year to July 2026, drawing fresh capital into insurance-linked securities. As spreads have narrowed, the cost of issuing these bonds has decreased, leading to expectations of continued heavy issuance in 2026. This influx of capacity, much of which is dedicated to wildfire risk, helps insurers offload unmanageable risks while providing investors with potential returns if no predefined catastrophe occurs.
