Catastrophe Bonds Linked to Wildfires Lose ‘Untouchable’ Status

Alternative investment managers are starting to take a serious interest in catastrophe bonds tied to wildfires, moving into a risk category that just a few years ago was seen as too difficult to model.

More than $5 billion of cat bonds with some level of exposure to wildfire risk were issued by insurers and sold to investors this year, according to Artemis, a specialist in insurance-linked securities that tracks market trends. That’s more than twice the level in 2024, with previous years seeing just a smattering of individual bond sales in the tens of millions of dollars.

Though still small, ...