Mexico purchases over $400m of natural disaster insurance

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The Mexican government have announced that they have completed the purchase of over $400m (4.8 billion pesos) of natural disaster insurance to help protect the country from events such as hurricanes and earthquakes. The insurance policy will provide cover for public infrastructure and low-income housing units according the government.

Mexico has tapped the global re/insurance markets and capital markets for disaster cover on a number of occasions, including the 2009 catastrophe bond transaction MultiCat Mexico. This latest deal sees Mexico secure a source of cover to help reduce the fiscal burden caused by disaster as well as making more efficient use of resources from their natural disaster fund, Fonden.

This policy is one of the largest ever secured by an emerging economy the government said. “Mexico consolidates its position as a global leader in the development of arrangements to transfer risk, which allow the creation of mechanisms to bring aid to the affected population”, said the governments release.

No re/insurers were mentioned by name in the release, however the Mexican government discussed their ability to secure this level of natural disaster cover from the reinsurance market despite the recent disasters in Japan, Australia and New Zealand. We may well see a press release emerge from a re/insurer involved in this transaction in the coming days.

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