Cat bond news

There is a “high probability” that holders of the $125 million Pacific hurricane tranche of the Mexican government’s IBRD / FONDEN 2020  catastrophe bond face a 50% loss of notional, which would equate to a $62.5 million loss for the cat bond market, investment manger Plenum has explained.

Plenum Investments maintains its “higher for longer” outlook for catastrophe bond investment returns, saying that even though cat bond risk spreads may have dropped since their peak, this is still an attractive point to enter the market and fixed income investors should seriously consider the asset class.

The Government of Mexico’s catastrophe bond is facing its most severe threat of the current Pacific tropical cyclone season, as hurricane Otis has rapidly intensified to a category 5 storm and its central pressure has deepened sufficiently to trigger the $125 million IBRD / FONDEN 2020 tranche of notes that are exposed.

The World Bank has ambitious plans to expand its use of catastrophe bonds for member countries by roughly 400% over the next five years, growing the amount of World Bank issued cat bonds outstanding to as much as $5 billion, Bloomberg has reported.

USAA, likely the most prolific and consistent of sponsors of catastrophe bonds, is back with what will be the 42nd we have listed from the company, seeking $300 million or more in multi-peril US reinsurance protection from the capital markets through a Residential Reinsurance 2023 Limited (Series 2023-2) issuance.

U.S. primary insurer Safepoint Insurance Company has returned to the catastrophe bond market seeking at least $150 million of named storm reinsurance protection from a Nature Coast Re Ltd. (Series 2023-1) issuance.

The California Earthquake Authority (CEA) increased its overall risk transfer and reinsurance protection through the middle of the year, lifting the program to almost $8.86 billion in size, with its catastrophe bonds making up a steady 24% of the total.

The insurance-linked securities (ILS) market and alternative sources of reinsurance capital are key providers of protection to Florida’s insurance sector and investor appetite for the risk will continue, rating agency Moody’s has said.

With the state of the market viewed as “fragile”, Luca Albertini, Chief Executive Officer and a Founding Partner of Leadenhall Capital Partners, explained to us that discipline is vital in insurance-linked securities (ILS) “for the sustainability of capital.”

Here are the ten most popular news articles, week ending October 22nd 2023, covering catastrophe bonds, ILS, reinsurance capital and related risk transfer topics. To ensure you never miss a thing subscribe to the weekly Artemis email newsletter updates or get our email alerts for every article we publish.