Insurance-Linked Securities now spans all property and casualty insurance lines, a new Aon report has said.

The global professional services firm published the 20th edition of its Insurance-Linked Securities Annual Report — August 2026, which said that the breadth of ILS market has been supported by the continued development of asset-intensive sidecars, which typically include casualty lines or whole-account structures.

The annual report found that alternative capital reached a record $144.5 billion, representing an annual growth rate of approximately 8.3 per cent over the past five years.

An Aon statement said: “Analysing ILS market activity during the 12-months ending June 30, 2026, the Aon securities report found catastrophe bond issuance reached $24.9 billion, the highest 12-month total on record and 15 per cent above the previous record of $21.8 billion.

“Outstanding catastrophe bond volume reached a record $63.4 billion, up 17 per cent from June 30, 2025, reflecting an estimated 11.6 per cent compound annual growth rate over the past decade.”

Aon estimates outstanding sidecar capital reached $23 billion across both property and casualty lines, approximately 50 per cent higher than year-end 2024, driven by strong margins and growth in casualty-focused sidecars.

Richard Pennay, chief executive officer of Aon Securities, said: “The past 12 months marked an important milestone for the ILS market as it continued to evolve into a source of foundational reinsurance capital for clients globally.

“As the market expands across additional risks and products, it is providing clients with another source of durable capital while continuing to attract investor interest.”

A record 78 sponsoring entities accessed the catastrophe bond market during the period under review — including 16 first-time issuers, underscoring its growing role in risk transfer strategies.

Insurers were the largest issuers by group (65 per cent), followed by reinsurers (17 per cent), governments (16 per cent) and corporate entities (1.5 per cent).

The market also continued to expand beyond traditional North American peak perils to include wildfire, European flood and convective storm, sovereign disaster relief and other specialised risks.

Catastrophe bonds generated a return of 12.5 per cent for investors during the 12-month period under review, based on the Aon Securities Catastrophe Bond Total Return Index, with coupon income remaining a key driver of investor returns and reinvestment.