Valuation of Insurance Organizations
Reinsurance and Catastrophe Bond Trends
Todd Fries | November 19, 2025
Footnotes
1 Reinsurance
Market Dynamics Midyear 2025 Renewal, Aon, July 2025.
2 Gallagher Re Natural Catastrophe and
Climate Report: First Half 2025, Gallagher Re, July 2025.
3 Beth Musselwhite, "US Nat Cat Activity Drives $84bn Global
Insured Losses in H1'25: Gallagher Re," Reinsurance News, July
2025.
4 "KCC Completes Review of California
Wildfire Model," Insurance Journal,
August 2025.
5 "Reform Made Real—California Department of
Insurance Completes Final Evaluation of Innovative Forward-Looking Model to
Address California's Coverage Crisis," California Department of Insurance, July 2025.
6 Raphael
Troitzsch, Nathalia Bellizia, Nadine Moore, Jacob Palmer, and Jürgen Bohrmann,
"Reinsurers Are Having a Good Run.
Will it Last?," BCG, September
2025.
7 Andy Polacek, "Catastrophe Bonds: A Primer and
Retrospective," Federal Reserve Bank of Chicago, 2018.
8 Kenneth Araullo, "Cat Bond Market Surges Past Record
High, and It's Still Growing—Moody's," Reinsurance Business, September 2025.
9 Steve
Evans, "Catastrophe Bond Issuance Breaks
Annual Record Already in 2025 at over $17.8bn," Artemis, July 2025.
10 Evans, "Catastrophe Bond Issuance Breaks Annual Record Already in 2025 at over
$17.8bn."
11 Araullo, "Cat
Bond Market Surges Past Record High, and It's Still Growing—Moody's."
12 "Hurricane Melissa Triggers 100%
Payout of $150 Million World Bank Catastrophe Bond for Jamaica," World Bank Group, November 2025.
13 Gautam Naik, "Jamaica Catastrophe Bondholders Now
Face Full-Trigger Event," Insurance
Journal, October 2025.
14 Steve Evans, "Cat Bond Market Growth to Continue,
Strong Issuance Expected Again in 2026: Moody's" Artemis, September 2025.
Note: Special thanks to Afshin Sayani, CFA, ASA, and Alec Bliemel of BVA Group LLC for coauthoring this article.
Despite record catastrophe losses in early 2025, driven by wildfires in California and several other weather‑related events, valuations across the property and casualty (P&C) sector have not been negatively impacted. Public company valuations and recent transactions suggest investors are rewarding steadier earnings profiles, stronger capital positions, and better use of risk transfer. In our analysis of selected P&C insurers and reinsurers, we see that improved reinsurance programs and record catastrophe bond capacity helped protect margins and support multiples even as claims rose.
Devastating wildfires in California spanning January 7, 2025, through January 31, 2025 (the Palisades Fire and Eaton Fire in Los Angeles County), led to record insurance claims for damaged property and have caused insurance companies throughout the United States to rethink risk management and catastrophe protection. As a result of the fires, insurers were estimated to have taken on losses of over $40 billion in the first quarter of 2025 relating to property claims alone. 1
These losses continued throughout the first half of 2025, with an estimated $84 billion in catastrophe-related global insured losses, marking an increase from about $61 billion in the first half of 2024. The first half of 2025 marked one of the costliest halves of the year for the industry since 2011. 2 This loss experience led to significant changes in the strategy of insurance companies in both catastrophe risk transfer and underwriting in high-risk areas, specifically those affected by the California wildfires.
Insurance companies utilize risk transfer outlets such as reinsurance as well as catastrophe bond issuance to diversify the risk of losses from catastrophe events. Most of the world's insured losses from weather and climate-related events in the first half of 2025 came from the United States, largely due to California wildfires and severe convective storms. 3 Because these losses are related largely to natural events, many insurers began to back out of covering catastrophe insurance within high-risk areas, specifically in California, due to the high-risk nature and inability to raise rates accordingly. 4
As a result of the pullout from insurers, the California government revisited wildfire-specific modeling in ratemaking. The state now allows insurers to utilize updated catastrophe modeling and higher, model-supported rates in exchange for a requirement for those insurance companies to write at least 85 percent of their statewide market share in wildfire-distressed areas. 5 This new initiative requires insurance coverage in higher-risk areas, leading to the additional need for risk transfer through both reinsurance and catastrophe bond issuance.
Overall, despite record losses and claims, changes to risk management and strong capital positions have led to improved financial and valuation metrics within the P&C insurance and reinsurance industry, as evidenced by data in the following section.
Reinsurance Market Growth
To assess performance in the casualty and reinsurance sectors, we selected an index of companies (the "Subject Companies") to analyze, which includes casualty and reinsurance insurers based in the United States and traded on major US exchanges. The following data follows the performance of the Subject Companies over the past 3 years, including the latest 12 months ("LTM") from October 1, 2025.
Total Revenue Subject Companies (USD Thousands)
Source: S&P Global, S&P Capital IQ, October 2025.
The graph, "Total Revenue Subject Companies (USD Thousands)," shows the total revenue figures for 41 selected (re)insurers with catastrophe exposure in the United States. Data for 2025 is presented as the latest 12 months from October 1, 2025.
Total EBITDA Subject Companies (USD Thousands)
Source: S&P Global, S&P Capital IQ, October 2025.
The graph, "Total EBITDA Subject Companies (USD Thousands)," shows the earnings before interest, taxes, depreciation, and amortization (EBITDA) figures for 41 selected (re)insurers with catastrophe exposure in the United States. Data for 2025 is presented as the latest 12 months from October 1, 2025.
The Subject Companies have shown total revenue growth of 3.9 percent and total EBITDA of 6 percent from 2024 to the 2025 LTM despite record claim payouts due to the wildfires and other natural disasters. This demonstrates the increase in demand for risk transfer, which partly offset claim payouts in the first part of 2025. The Subject Companies also saw increased valuation multiples because of the uptick in demand, with enterprise value/EBITDA multiples increasing from an average of 9.5x in 2024 to 9.6x in the LTM 2025.
Increases in multiples were largely driven by increases in capital, greater profitability, and the favorable reinsurance pricing market with strong demand and improved investment income. 6 The increase in reinsurance dedicated capital over the past several years is detailed in the following graph.
Reinsurance Dedicated Capital (USD Billion)
Source: Reinsurance Market Report: Results for Half-Year 2025, Gallagher Re, September 2025.
As another data point, the graph "Reinsurance Dedicated Capital (USD Billion)," references the Gallagher Re Reinsurance Market Report showing global dedicated reinsurance capital over the past 5 years, including the first half of 2025. At the half-year 2025, global dedicated reinsurance capital reached a new high of about $660 billion as a result of strong profitability within the sector due to pricing advantages and high investment yield.
Overall, strong demand for risk-transfer and healthy investment returns improved performance of the reinsurance market with revenue, EBITDA, and dedicated capital improvements in the first half of 2025, despite mass claim payouts incurred by the industry overall related to the wildfires.
Catastrophe Bond Issuance
Insurance companies have also turned to alternative risk-transfer outlets such as the issuance of catastrophe bonds. Following the devastating Hurricane Andrew in 1992 that led to over $15.5 billion in claims, P&C insurers reevaluated risk exposure and looked to find new ways to generate capital and diversify risk, creating the catastrophe bond. A catastrophe bond is a type of security that pays the sponsor (often an issuer, reinsurer, or sovereign) when a predefined disaster risk is realized. These bonds typically offer investors higher returns given the event risk associated. 7 The catastrophe bond market has seen record issuance in 2025 as insurer participation has grown, coupled with elevated investor appetite given attractive risk-adjusted returns.
Catastrophe Bond Issuance, Bonds Outstanding, and Number of Deals
Source: "Catastrophe Bonds & ILS Issued and Outstanding by Year," Artemis, October 2025.
This graph shows the total catastrophe bond issuance, total bonds outstanding, and number of deals annually over the past 10 years. Data for 2025 is presented as year-to-date data as of October 1, 2025.
Growth in bond issuance and the number of deals is driven by the combination of increased insurer participation and investor appetite. According to Aon's Catastrophe Bond Total Return Index, catastrophe bonds delivered on average a 14.1 percent return over the 12-month period ending June 30, 2025. 8 This elevated risk-adjusted return, paired with diversification benefits, has led to greater demand from investors. By the first half of 2025, catastrophe bond issuance had broken the annual record with over $17.8 billion of issuance. 9
Additionally, the average deal size increased from $190.3 million in 2024 to over $240.7 million in the first half of 2025. 10 Of the new catastrophe bond deals in 2025, over 93 percent were tied to North American catastrophe protection, 11 reflecting sponsor demand post-wildfires and investor comfort with US risk models.
On October 28, 2025, Category-5 Hurricane Melissa struck Jamaica and is expected to fully trigger the country's $150 million World Bank-arranged parametric catastrophe bond, delivering a rapid payout to the sovereign. 12 Early broker/investor commentary points to a full principal loss for bondholders under the parametric track/intensity boxes, with broader economic losses likely in the low single-digit billions.
Importantly for market tone, coverage indicates continued investor appetite for catastrophe bonds even with a full trigger, given recent double-digit 12-month returns and record issuance. 13 From a valuation standpoint, Hurricane Melissa should function as a contained loss to insurance-linked securities (ILS) investors rather than a shock to US insurer earnings. If primary/retro spreads only widen modestly, insurers retain the benefit of lower net catastrophe volatility, supporting higher quality-of-earnings and, by extension, sturdier valuation multiples. For ILS managers, a localized principal loss may briefly elevate spreads and trap collateral, but recurring management-fee economics and robust new-issue pipelines tend to anchor platform value.
Conclusion
Through the analysis of the Subject Companies' performance following the wildfires in early 2025, along with examining the record catastrophe bond issuance seen in 2025, there is a clear trend of insurance companies looking to transfer catastrophe-specific risk. As a result of this trend and increased demand, reinsurance companies have seen improved performance indicated by revenue and EBITDA growth of 3.9 percent and 6 percent in the 2025 LTM and increased valuation multiples, despite the large amount of claims paid out at the beginning of the year due to the wildfires. Record increases in catastrophe bond issuance are expected to continue into 2026 due to the elevated demand for property catastrophe reinsurance and the attractive returns expected to drive further expansion. Recent reports indicate roughly $14 billion in catastrophe bonds are expected to mature over the next 4 quarters, positioning the market for continued growth and high levels of new issuance. 14 Overall, catastrophe risk transfer markets are positioned for continued growth as insurers work to stabilize earnings and capital efficiency.
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