In a September 2025 blog post, we provided an initial assessment of the Atlantic hurricane season. Now that the full season is complete, we want to take some time to review and analyze it in its entirety.
The Atlantic hurricane season is generally accepted to run from June to November each year. This season’s most devastating storm, Hurricane Melissa, a level 5 storm that devastated Jamaica this fall, formed at the very end of October and caused a dramatic end to the season.
Closing the season with one of the most intense storms in Atlantic storm history, one might assume that the 2025 hurricane season was a historic one.
Earlier this year, even the National Oceanic and Atmospheric Administration (NOAA) predicted heightened activity, anticipating a 60% chance of an above-normal season thanks to factors such as warmer ocean temperatures and reduced trade winds and the Insurance Information Institute anticipated nine hurricanes by the end of November.(1) However, the 2025 hurricane season ultimately ended more mild than expected, and even more tame than previous years.
Through December 1st, there were seven tropical storms and five recorded hurricanes posting a combined total of 12 dangerous storms. Historically speaking, the average number of combined hurricanes and tropical storms per year since 2015 is 18, which means this year’s dangerous storm count was 33% less than average.(2)
Many cat bonds are issued to mitigate losses from hurricane damage, so what should investors in the Brookmont Catastrophic Bond ETF ($ILS) take away from the year’s hurricane season?
In our opinion, more projected disaster risk can sometimes provide savvy investors with more investment opportunities. This season was expected to have a large and dramatic hurricane season after several years of increasing activity, and as a result, more insurance & reinsurance companies turned to cat bonds for increased protection. This year, the cat bond market saw more new issuance before mid-July than in all of 2024.(3)
Investors have more opportunities for investment, which we also believe might ultimately lower barriers to entry and expand access to more (and more types of) investors.
Of course, seasonal predictions are merely predictions, no matter how well-informed they might be. We just discussed the significant difference between the total number of storms expected this year and the number of storms that occurred. It’s our view that this year was also an important reminder that the size and strength of storms are highly important, and the year was ultimately a positive reminder about the infrequency of triggering events.
Most of the cat bond trigger risk related to storms are tied to perils impacting the United States. About 70% of the existing cat bonds worldwide are currently tied to US wind and hurricane damage.(4) In 2025, not a single hurricane made landfall in the US.(5)
We believe this year can be seen as a “live lab” year providing investors an opportunity to monitor how actual hurricane landfalls, loss tallies, and payouts play out, and then compare those to the modeled assumptions to how potential investment opportunities - like, of course, the ILS ETF - ultimately performed.
Key questions for investors considering owning cat bonds through investment funds might include:
We believe that seeking answers to these questions could help investors evaluate the potential attractiveness of a future investment.
Overall, 2025 appears to have been a significant year for the cat bond market. For the first time ever, issuance was greater than $20B in a single calendar year. (In fact, as of the final week of December, total new issuance was sitting at $24.8B.)(6) We are encouraged to see more choice among investible issues, more competition thanks to the presence of new issuers, and more visibility into the bond issues themselves as this market continues to become more robust.
1) Brookmont Capital Management Internal Research
2) National Hurricane Center (NHC)
3) WaterStreet Company
4) National Oceanic and Atmospheric Association (NOAA)
5) The Washington Post
6) Artemis
7) NPR
Want to dive deeper into the data and case studies behind these surprising outcomes? Download our comprehensive whitepaper: "Risk Transfer & Resilience: How Catastrophe Bonds Support Disaster Recovery and Portfolio Stability" for detailed analysis of the 2025 LA wildfires, Hurricane Ian, and Chilean earthquake case studies.