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Twelve Securis, the specialist insurance-linked securities investment manager, is not anticipating any impact to the World Bank catastrophe bond or any of the firm’s private ILS positions due to losses caused by major hurricane Erick in Mexico yesterday.

As we had reported, Erick rapidly intensified into a major hurricane as it approached landfall on Mexico’s Pacific coast, which for a time put the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond on-watch.

However, as we later explained, the NHC reported that the minimum central pressure of hurricane Erick was 950mb at landfall, having risen as it neared the coast, which reduced the risk to the cat bond and left us believing it was unlikely to be affected by the storm.

Now, catastrophe bond and ILS investment manager Twelve Securis has confirmed that it does not believe this catastrophe bond faces any threat.

The company explained, “In the cat bond market, the primary exposure to Mexican Pacific storms comes from a single bond issued by International Bank for Reconstruction and Development (IBRD), which features a parametric trigger based on the storm’s reported central pressure. Based on the latest pressure estimates from the designated reporting agent, we do not expect any impact to this bond or to any positions held by Twelve Securis.”

Twelve Securis also said it does not anticipate losses from hurricane Erick affecting any of the private ILS positions it holds in its portfolios.

“Likewise, no impact is expected to any Private ILS positions managed by Twelve Securis as a result of Hurricane Erick,” the company said.

Private ILS positions typically feature collateralized or transformed reinsurance and retrocession arrangements. Other market sources we’ve spoken with have also told us they believe it unlikely any positions they held would be affected by this hurricane.

Hurricane Erick did cause meaningful damage to the region it made landfall in and wider-spread flooding and landslides. As a result, there will be insured losses and potentially some traditional reinsurance impact, but with the majority of ILS capital deployed higher in reinsurance towers, or having far less exposure to Mexico than to the United States, the effects on this market will be limited at most.

It’s worth noting though, that had Erick intensified further or made landfall in an area of greater insured value concentration on the Mexican coast, such as Acapulco, then it would likely have been a different story, with the cat bond perhaps triggered and some ILS other capital perhaps also paying out to assist the country in its recovery from the storm.

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Major hurricane Erick has made landfall on the coast of Mexico with 125 mph sustained winds in the state of Oaxaca and the NHC reports the minimum central pressure at 950mb, which is above the level where the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond would be triggered.

As we reported earlier this morning, hurricane Erick intensified rapidly to become a major category 4 storm, with sustained winds of over 140 mph and a minimum central pressure estimated at 939mb.

As we said in our earlier article, that central pressure was only two millibars above the level needed to activate a partial payout from the IBRD Mexico Pacific coast hurricane catastrophe bond.

The trigger threshold where a payout would be due from the World Bank parametric catastrophe bond, which provides Pacific coast named storm disaster insurance to the government of Mexico, is for a storm with a central pressure at or below 937mb to breach the parametric named storm box drawn near to the coastline.

As we said in our second update on the hurricane’s potential threat to the catastrophe bond, as of 09:00 UTC the National Hurricane Center had updated its estimate to a 940mb minimum central pressure, so slightly higher.

Now, with dangerous major hurricane Erick having made landfall, the minimum central pressure at that time, 12:00 UTC, is reported at an estimated 950mb, so higher still and further away from the threshold for the parametric cat bond to face a payout.

It’s important to note that there could still be some uncertainty, but sources we’ve now spoken with in the last hour do not believe the catastrophe bond will face a payout, unless the reported central pressures were revised down.

Suggesting that, investors will now view the risk to Mexico’s Pacific coast named storm catastrophe bond as greatly reduced. Although the view of risk may not subside completely until some analysis on how the central pressure extrapolates along hurricane Erick’s track, at the point it would have breached the parametric box for the cat bond, has been completed.

But, with the central pressure so much higher at landfall and never having been reported as low as would have been needed to trigger the cat bond, it’s possible that an official calculation agent report may not even be deemed necessary for this hurricane event.

Significant impacts are anticipated for the landfall region from hurricane force winds and storm surge, while double digit inches of rainfall are anticipated further inland, so the threat to the local area remains meaningful.

However, the mountainous region of Oaxaca, Mexico where landfall has occurred is expected to degrade hurricane Erick rapidly now.

You can read all about the IBRD CAR Mexico 2024 (Pacific) catastrophe bond and more than 1,000 other cat bond transactions in the extensive Artemis Deal Directory.

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Were major hurricane Erick to trigger the $175 million IBRD CAR Mexico 2024 (Pacific) catastrophe bond that provides disaster insurance to the Mexican government, it could reignite the debate surrounding parametric triggers, given the recency to another trigger event with hurricane Otis back in 2023, Florian Steiger of Icosa Investments has suggested.

As we reported earlier this morning, hurricane Erick intensified rapidly to become a major category 4 storm, with sustained winds of 140 mph and a minimum central pressure estimated at 939mb.

As we said in our earlier article, that central pressure was only two millibars above the level needed to activate a partial payout from the IBRD Mexico Pacific coast hurricane catastrophe bond.

However, it’s worth pointing out that a fresh update from the NHC now has the minimum central pressure of hurricane Erick very slightly higher at 940 mb, so now 3 millibar above the trigger pressure.

Update: A further landfall update at 12:00 UTC states that hurricane Erick made landfall with 125 mph sustained winds and a minimum central pressure of 950mb, according to the NHC. So pressure was above the trigger point for the cat bond and did not seem to drop below at any stage as the hurricane approached landfall.

Icosa Investments, the specialist catastrophe bond fund manager, has commented, “Tropical Storm Erick, which formed off Mexico’s Pacific coast, has intensified into a Category 4 hurricane within just a few hours. With sustained winds exceeding 230 km/h, the storm poses an imminent threat and is expected to cause severe damage. Landfall is anticipated later today.

“Unlike in the United States, only a small number of cat bonds cover hurricane risks in Mexico. The current exposure is concentrated in a single IBRD instrument, representing just over 0.3% of market weight. As with most IBRD transactions, this bond relies on a parametric trigger. If the storm’s central pressure at landfall falls below a predefined level, a payout, either partial or total, is made. Such a total loss appears unlikely at present, but it cannot be entirely dismissed, whilst a partial payout is certainly within the realms of possibility as the latest reported pressure is only marginally above the payout threshold.

“Definitive clarity will likely not arrive for several days, because the National Hurricane Center may revise its datasets retroactively. Meanwhile, the bid–ask spread on the affected bond is likely to widen significantly.”

CEO of Icosa Investments Florian Steiger further stated, “Rapid intensification in the Pacific is once again front-page news for cat-bond investors. A fast-strengthening storm now threatens to cause a partial-payout of yet another parametric cat bond, echoing recent experience with Hurricane Otis, which also intensified to major hurricane status within a few hours in almost the same region.

“Such an additional default of a Mexican parametric bond in such short order is bound to reignite debate about trigger design, basis risk and whether the market is truly pricing rapid-intensification exposure. It may also stretch investor patience with parametric structures, whose mixed performance in recent years is already under the microscope.”

Read our earlier article for more on the situation with major hurricane Erick and Mexico’s Pacific coast named storm parametric catastrophe bond.

You can read all about the IBRD CAR Mexico 2024 (Pacific) catastrophe bond and more than 1,000 other cat bond transactions in the extensive Artemis Deal Directory.

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Rapid intensification of tropical storm Erick into a major hurricane has brought Mexico’s Pacific coast hurricane parametric catastrophe bond, the $175 million IBRD CAR Mexico 2024 (Pacific) issuance, sharply into focus, as Erick’s central pressure is estimated just a couple of millibars above where the trigger for attachment sits.

At this time, major hurricane Erick has reached category 4 strength, with sustained winds estimated by the National Hurricane Center at 145 mph, with gusts estimated at over 170 mph.

In the next few hours, the centre of Erick is forecast to make landfall near to the border region between the Mexican states of Oaxaca and Guerrero this morning.

In the latest update from the NHC, major hurricane Erick’s minimum central pressure is estimated at 939 mb and the agency says some further intensification is possible before landfall, after which weakening is anticipated.

Artemis has learned that the minimum central pressure of a hurricane that is required for any activation of a payout from the Mexican government’s World Bank supported IBRD Pacific storm cat bond is 937 mb, so just 2 mb away from the latest storm pressure estimate for Erick.

Updates: A fresh estimate from the NHC at 09:00 UTC put the estimated minimum central pressure for hurricane Erick a millibar higher, at 940mb.

A further landfall update at 12:00 UTC states that hurricane Erick made landfall with 125 mph sustained winds and a minimum central pressure of 950mb, according to the NHC. So pressure was above the trigger point for the cat bond and did not seem to drop below at any stage as the hurricane approached landfall.

In that region along the coast from the Mexican states of Oaxaca into Guerrero, in order for a 25% payout of the catastrophe bonds $175 million of principal to come due, a storm must cross into the parametric box with a minimum central pressure of between 937 mb and 931 mb.

Depending on where the landfall occurs, a higher payout of principal could be due further up the coast near to Acapulco, we are told, while a more intense storm with a pressure that dropped below 931 mb could drive a 50% or higher payout for the catastrophe bond. It’s important to note that we believe the parametric trigger works on a sliding scale, so while the minimum payout for the notes is 25%, it can be any percentage above that depending on the pressure and location it crosses the parametric box.

Based on the latest NHC data, for an estimated central pressure of 939 mb, hurricane Erick only needs to deepen by 2 millibar before it breaches the parametric named storm box for investors in the Mexico Pacific coast catastrophe bond could be on the hook for a payout.

It can take some time for payout determinations to be made with parametric catastrophe bonds such as this, given the use of official NHC reports to make that final decision.

In this case, we understand the Pacific coast IBRD catastrophe bond utilises the Automated Tropical Cyclone Forecast best-track data files for that.

In the most recent case of one of the Mexican government’s catastrophe bonds paying out, hurricane Otis caused a just under 50% payout with that storm making landfall in October 2023, but the final report being delivered by March 8th 2024 and then payout not being made until late March or April of that year.

So, should hurricane Erick deepen and its central pressure be reported closer still to the thresholds required, it could take weeks or months for clarity to be understood, about whether the Pacific coast catastrophe bond has been triggered, or not.

With just 2 millibars between the latest central pressure and the initial threshold for attachment to begin for this cat bond, depending on landfall location and where pressure sits as it is extrapolated across the parametric box, holders of the IBRD Pacific coast catastrophe bond notes could be in for a nervous few hours as they wait for the next report from the NHC to then make their own estimations for where pressure could have been as the box was crossed.

Finally, it’s worth noting that storm chasers have provided inputs to NHC best-track data in the past, through provision of on-the-ground readings of central pressure and the catastrophe bond market has experience of that with hurricane Patricia back in 2015.

Morgerman is once again on the ground in Mexico hoping to intersect the eye of major hurricane Erick and will no doubt record pressure readings if he is successful. Something to watch out for and that could provide helpful data to provide an earlier idea of the pressure at landfall, although no necessarily at the point where the parametric named storm box line is crossed.

We’ll update you should hurricane Erick pose a major threat to the notes, although given landfall is just hours away now we may not see any further central pressure updates before the storm has already crossed the parametric line.

Whether the cat bond is really threatened, or not, the threat to lives, livelihoods, property and infrastructure is clear.

The NHC warns in its latest update, “Erick is now an extremely dangerous category 4 hurricane, and devastating wind damage is likely where the core moves onshore. Weather conditions are already deteriorating in the warning area, and preparations to protect life and property should have been completed.

“Erick will produce heavy rainfall across portions of Central America and Southwest Mexico through this week. Life-threatening flooding and mudslides are likely, especially in areas of steep terrain.

“A dangerous, life-threatening storm surge is expected to produce coastal flooding near and to the east of where the center crosses the coast, in areas of onshore winds. The surge will be accompanied by large and destructive waves.”

You can read all about the IBRD CAR Mexico 2024 (Pacific) catastrophe bond and more than 1,000 other cat bond transactions in the extensive Artemis Deal Directory.

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Descartes Underwriting, the parametric risk transfer specialist, has secured a strategic investment from Battery Ventures, a global technology-focused global investment firm.

The transaction was executed at a premium to Descartes’ most recent Series B valuation. It allows Battery to join the organisation’s shareholder base, while all existing investors retain a substantial  majority of their holdings.

As part of the transaction, Marcus Ryu, Partner at Battery Ventures and former Chief Executive Officer (CEO) and co-founder of Guidewire Software will join Descartes as a board observer.

Tanguy Touffut, CEO and co-founder of Descartes, said: “Over the past six years, Descartes has established itself as the leading parametric insurance business for climate-related risks, remaining true to our scientific approach to risk transfer.

“As we scale globally to address the widening protection gap around natural disasters, we’re thrilled to welcome Marcus — one of the world’s most accomplished Insurtech entrepreneurs — whose experience and vision will be invaluable as we execute our ambitious roadmap.”

Adding: “Battery’s investment is a major endorsement of our mission and a strong signal of our commitment to the North American market, already our largest market.”

Ryu, also commented: “Over twenty years of serving the global P&C insurance industry informs my keen interest in applying technology to address the enormous underinsurance gap.

“Parametric insurance is one of — if not the — most promising approaches to transfer risk efficiently, and like many industry participants I believe it will continue to grow in importance and adoption.”

Ryu continued: “The team at Descartes Underwriting is uniquely credentialed in this domain, and I am very impressed with the market and thought leadership position they have built with brokers, capacity partners and insureds in a short period.”

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SV SparkassenVersicherung (SV) is setting its sights on future catastrophe bond activity after making its market debut earlier this year with the $100 million Liongate Re DAC issuance, a landmark deal co-sponsored with Japan’s Zenkyoren.

According to SV Chief Financial Officer (CFO) Roland Oppermann, the transaction not only overcame long-standing barriers for the regional German insurer but also paved the way for future capital markets engagement.

As Artemis previously reported, the debut Liongate Re DAC catastrophe bond was successfully priced and finalised to provide Japanese mutual Zenkyoren with $100 million in aggregate earthquake reinsurance on an indemnity trigger basis, while also providing a source of German parametric triggered quake reinsurance cover for SV SparkassenVersicherung.

Speaking to Artemis, Oppermann described how the German regional insurer overcame pricing, reputation, and structural hurdles by collaborating with Zenkyoren, Japan’s largest mutual insurer, to co-sponsor a joint cat bond.

Firstly, we asked Oppermann to explain what the key drivers behind SV’s decision were to sponsor its first catastrophe bond.

“It didn’t come suddenly. We had been thinking about issuing a catastrophe bond for quite some time. I’ve been with SV for eleven years now, and I think we seriously considered it three times during that period,” Oppermann said.

“Each time, we ended up not pursuing it because we saw a significant price gap between traditional reinsurance and issuing a cat bond, especially in Europe. That gap tends to be larger here than in the U.S. or Asia.”

A key factor that Oppermann highlighted is that SV didn’t have a reputation in the capital markets, and there’s often an additional cost associated with being new sponsor.

“So, we asked ourselves: is there a way to do this together with a well-established partner? We had some experience in the Japanese market already and were looking for partners on the traditional reinsurance side. That’s when we began discussions with Zenkyoren,” the CFO went on.

“Initially, we talked about exchanging risk: they would take on our earthquake exposure and we would take on theirs. That would have given both of us diversification. But from a regulatory perspective, Japanese mutuals aren’t allowed to sign foreign risks, so that idea wasn’t feasible.”

“Still, the conversations with Zenkyoren continued, and we realized there were a lot of similarities between our organizations. They are restricted to operating in Japan; we’re restricted to a part of Germany. So, both of us have high concentration risk and little geographic diversification. They come from the mutual insurance space; we come from the public sector insurance side and are not publicly listed as well. But we share a similar mindset, both are very traditional, very conservative institutions.

“So that sparked the idea of working together, and ultimately led to what I think is a very innovative joint bond.”

We’ve previously explained that this new cat bond is innovative for two reasons. Firstly, as we understand it is the only catastrophe bond to ever provide parametric earthquake protection covering risks in Germany and a very rare European parametric quake deal in catastrophe bond, or similar, format.

Secondly, is the way it has provided a shared limit for two ceding beneficiaries, one being Japanese mutual Zenkyoren, the second being SV SparkassenVersicherung with that reinsurance limit also being shared across an indemnity aggregate cover and a parametric cover as well.

“Zenkyoren has one of the largest reinsurance programs for elemental perils globally, and they have a lot of experience in issuing catastrophe bonds. Their Nakama Re series is a well-established structure in the market,” Oppermann further explained.

“The concept was that we would effectively replace part of their Nakama Re bond. The risk profile that Zenkyoren would have issued in Nakama Re, we took over in a traditional reinsurance contract from them. We then placed that same risk profile into our bond and added our own earthquake risk in Germany.”

“The bond includes two risk components. Zenkyoren’s Japanese risk, which is structured on an indemnity basis, and our German earthquake risk, which we chose to structure parametrically.”

The CFO continued: “We went with a parametric model because we wanted to make the cat bond easier for investors to assess. Since this was our first issuance, we didn’t want to overwhelm the ILS community with complexity. Parametric structures tend to be well understood and well-liked by cat bond investors. They offer transparency and simplicity.”

Oppermann believes the partnership route could appeal to other insurers in a similar position.

“This structure was a win-win: for us, for Zenkyoren, and for investors. It may be a model for how smaller insurers can enter the ILS space, by teaming up, aligning risk, and presenting something that’s both innovative and familiar.”

The Liongate Re DAC catastrophe bond also arrived amid broader conversations in Germany about insuring against elemental perils, particularly in the wake of major flood events like Bernd. Should mandatory coverage be introduced, SV sees potential to extend its ILS involvement.

“If the market needs more reinsurance capacity, we’re now better positioned,” Oppermann said.

“We’ve built the relationships, we understand the process, and we’re no longer new to the capital market.”

And finally, Oppermann revealed to Artemis whether there are other perils that SV might consider covering in future ILS transactions.

“Yes, we’re certainly considering that. In Germany, there’s an ongoing political discussion about introducing mandatory insurance for elemental perils. Events like the Ahr flood, which was one of the largest heavy rainfall disasters in Europe, highlighted just how underinsured the country is for those risks,” the CFO explained.

“For us, it’s good that we already have a first step into the ILS market. If that demand for reinsurance materialises, we’re in a position to return to the capital markets, potentially placing elemental perils as part of our program,” he concluded.

As a reminder, you can read all about this new Liongate Re DAC catastrophe bond and every other cat bond deal in the extensive Artemis Deal Directory.

Read all of our interviews with ILS market and reinsurance sector professionals here.

SV SparkassenVersicherung eyes future cat bonds after Liongate Re debut: CFO was published by: www.Artemis.bm
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SV SparkassenVersicherung (SV) is setting its sights on future catastrophe bond activity after making its market debut earlier this year with the $100 million Liongate Re DAC issuance, a landmark deal co-sponsored with Japan’s Zenkyoren.

According to SV Chief Financial Officer (CFO) Roland Oppermann, the transaction not only overcame long-standing barriers for the regional German insurer but also paved the way for future capital markets engagement.

As Artemis previously reported, the debut Liongate Re DAC catastrophe bond was successfully priced and finalised to provide Japanese mutual Zenkyoren with $100 million in aggregate earthquake reinsurance on an indemnity trigger basis, while also providing a source of German parametric triggered quake reinsurance cover for SV SparkassenVersicherung.

Speaking to Artemis, Oppermann described how the German regional insurer overcame pricing, reputation, and structural hurdles by collaborating with Zenkyoren, Japan’s largest mutual insurer, to co-sponsor a joint cat bond.

Firstly, we asked Oppermann to explain what the key drivers behind SV’s decision were to sponsor its first catastrophe bond.

“It didn’t come suddenly. We had been thinking about issuing a catastrophe bond for quite some time. I’ve been with SV for eleven years now, and I think we seriously considered it three times during that period,” Oppermann said.

“Each time, we ended up not pursuing it because we saw a significant price gap between traditional reinsurance and issuing a cat bond, especially in Europe. That gap tends to be larger here than in the U.S. or Asia.”

A key factor that Oppermann highlighted is that SV didn’t have a reputation in the capital markets, and there’s often an additional cost associated with being new sponsor.

“So, we asked ourselves: is there a way to do this together with a well-established partner? We had some experience in the Japanese market already and were looking for partners on the traditional reinsurance side. That’s when we began discussions with Zenkyoren,” the CFO went on.

“Initially, we talked about exchanging risk: they would take on our earthquake exposure and we would take on theirs. That would have given both of us diversification. But from a regulatory perspective, Japanese mutuals aren’t allowed to sign foreign risks, so that idea wasn’t feasible.”

“Still, the conversations with Zenkyoren continued, and we realized there were a lot of similarities between our organizations. They are restricted to operating in Japan; we’re restricted to a part of Germany. So, both of us have high concentration risk and little geographic diversification. They come from the mutual insurance space; we come from the public sector insurance side and are not publicly listed as well. But we share a similar mindset, both are very traditional, very conservative institutions.

“So that sparked the idea of working together, and ultimately led to what I think is a very innovative joint bond.”

We’ve previously explained that this new cat bond is innovative for two reasons. Firstly, as we understand it is the only catastrophe bond to ever provide parametric earthquake protection covering risks in Germany and a very rare European parametric quake deal in catastrophe bond, or similar, format.

Secondly, is the way it has provided a shared limit for two ceding beneficiaries, one being Japanese mutual Zenkyoren, the second being SV SparkassenVersicherung with that reinsurance limit also being shared across an indemnity aggregate cover and a parametric cover as well.

“Zenkyoren has one of the largest reinsurance programs for elemental perils globally, and they have a lot of experience in issuing catastrophe bonds. Their Nakama Re series is a well-established structure in the market,” Oppermann further explained.

“The concept was that we would effectively replace part of their Nakama Re bond. The risk profile that Zenkyoren would have issued in Nakama Re, we took over in a traditional reinsurance contract from them. We then placed that same risk profile into our bond and added our own earthquake risk in Germany.”

“The bond includes two risk components. Zenkyoren’s Japanese risk, which is structured on an indemnity basis, and our German earthquake risk, which we chose to structure parametrically.”

The CFO continued: “We went with a parametric model because we wanted to make the cat bond easier for investors to assess. Since this was our first issuance, we didn’t want to overwhelm the ILS community with complexity. Parametric structures tend to be well understood and well-liked by cat bond investors. They offer transparency and simplicity.”

Oppermann believes the partnership route could appeal to other insurers in a similar position.

“This structure was a win-win: for us, for Zenkyoren, and for investors. It may be a model for how smaller insurers can enter the ILS space, by teaming up, aligning risk, and presenting something that’s both innovative and familiar.”

The Liongate Re DAC catastrophe bond also arrived amid broader conversations in Germany about insuring against elemental perils, particularly in the wake of major flood events like Bernd. Should mandatory coverage be introduced, SV sees potential to extend its ILS involvement.

“If the market needs more reinsurance capacity, we’re now better positioned,” Oppermann said.

“We’ve built the relationships, we understand the process, and we’re no longer new to the capital market.”

And finally, Oppermann revealed to Artemis whether there are other perils that SV might consider covering in future ILS transactions.

“Yes, we’re certainly considering that. In Germany, there’s an ongoing political discussion about introducing mandatory insurance for elemental perils. Events like the Ahr flood, which was one of the largest heavy rainfall disasters in Europe, highlighted just how underinsured the country is for those risks,” the CFO explained.

“For us, it’s good that we already have a first step into the ILS market. If that demand for reinsurance materialises, we’re in a position to return to the capital markets, potentially placing elemental perils as part of our program,” he concluded.

As a reminder, you can read all about this new Liongate Re DAC catastrophe bond and every other cat bond deal in the extensive Artemis Deal Directory.

Read all of our interviews with ILS market and reinsurance sector professionals here.

SV SparkassenVersicherung eyes future cat bonds after Liongate Re debut: CFO was published by: www.Artemis.bm
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The Government of Jamaica has prepared itself for the 2025 hurricane season with a further increase to its National Natural Disaster Risk Financing Policy arrangements, with the largely parametric reserves and contingent financing augmented with parametric insurance and its World Bank catastrophe bond.

In March this year, the Jamaican Ministry of Finance negotiated a further J$6.5 billion contingent financing arrangement, which we believe was in the form of a World Bank supported Catastrophe Deferred Drawdown Option (CAT DDO).

In addition, the Jamaican government has meaningful layered protection from a range of instruments, made up of its own reserves and contingent disaster financing, contingent instruments from international partners, parametric insurance from the CCRIF and its catastrophe bond that sits at the top of the layered financing tower.

In a speech last week, Minister of Finance and the Public Service, Fayval Williams, disclosed the additional disaster risk financing and explained the layered approach Jamaica has adopted.

Her comments are an excellent example of how a government can, over time, reach a stage of maturity in its disaster risk financing arrangements that leaves it prepared for most eventualities, with a range of structures, instruments and sources of capital designed to respond to different return-period catastrophe events.

It’s an example other countries take note of, as Jamaica now has one of the most sophisticated disaster risk financing approaches in the world, with private markets and capital augmenting its own reserves and development banks contributions, while the structures are largely parametric in the way they would be activated by a disaster event.

Williams explained, “In the face of what we know to be increased intensity of weather related events, we would have been in a very bad place when Beryl struck if we had not implemented our National Natural Disaster Risk Financing Policy.

“It has many layers of what we call shock absorbers for the economy. Since then, we have increased our disaster coverage to ensure we have the financial flexibility to meet natural disasters.

“The NNDRFP allows the government to prepare financially for natural disasters, the policy ensures funds are available for response and recovery efforts. Had this government not had the foresight to ensure we had this multi-layered risk absorbing facility in place when category five hurricane Beryl hit, we would not have been able to do the emergency repairs to public infrastructure, clean up and relief recovery activities, as well as the social expenditure to assist vulnerable populations.

“Currently, our NNDRF cushion stands at approximately $130.6 billion in terms of coverage. How much we can draw-down on that will depend on the severity of the disaster. Our disaster financing policy takes into consideration those events that are high frequency but low severity, such as floods, and these can be dealt with through budget reallocation or reserve and the contingency funds to provide immediate resources for relief efforts.

“For the higher-severity, low-frequency events, such as hurricanes, we have to use insurance instruments, such as the facility that we have with CCRIF, our Caribbean partner.

“It says in times of disaster, our policy that is, start with what we can reallocate, what we can defer, what we can delay or cancel and if that is not enough, go to the next layer, the contingency fund and the National Disaster fund. This is $4.8 billion. Then you go to the National Natural Disaster Reserve Fund that has $1 billion dollars. Together these two funds total $5.8 billion and are Jamaica’s own resources.

“If those are not enough, the next layer would be two contingent credit arrangements, thanks to our international partners, and I’m pleased to note that on Tuesday, March 4th 2025, an additional facility was added for an amount of $6.5 billion to bring the disaster coverage for Jamaica, again, just to reiterate that number, to $130.6 billion.

“Of course, how much we can access will depend on the severity of the disaster.

“An advantage of the catastrophe financing coverage we have in place is that it is parametric, meaning there are predefined thresholds and predefined payouts. So, if the thresholds are met, funds are triggered and the recovery work can get started almost immediately.

“Compare this with traditional insurance, in which there would have to be a detailed damage assessment, which, as you know, could take months of back and forth and agreeing and disagreeing about what’s damaged what’s not damaged.

“During that time, as you can imagine, of this detailed damage assessment, you could see how people, the infrastructure and the GDP of the country would be suffering, and how slow that process would be in addressing recovery efforts.

“The commitment of this government is to continue strengthening our multi-layered National Natural Disaster Risk Financing policies and to fill in any gaps that we have.

“I will always give former Minister Nigel Clark credit for the work that he started to establish this. We are continuing that work and are ensuring that these facilities remain in place for the benefit of the people of Jamaica, because we understand our geographic location in a hurricane belt, and that we need to be prepared well ahead of that. Not thinking when we are in it, what we are going to do? But we would have already had the plans and the financing in place to support that.”

$130.6 billion Jamaican dollars equates to around US $815 million, so a very meaningful capital buffer to protect the country against severe weather and natural catastrophe events.

The World Bank facilitated $150 million parametric IBRD CAR Jamaica catastrophe bond sits at the top of the financing tower, for any particularly catastrophic disaster impacts the country could face.

While the cat bond did not pay out for hurricane Beryl, receiving some unwarranted criticism for that, it was evident that Jamaica’s layered approach to financing its disaster risks was more than adequate for the impact of that storm and now the cat bond coverage remains available for any significant hurricane impacts through three more hurricanes, up to the end of 2027.

Recall that, the catastrophe bond was always designed to protect the residual risk at the top of Jamaica’s disaster risk financing tower of arrangements.

While, after Beryl, Jamaica’s Minister of Finance at the time, Dr. Nigel Clarke, had explained that not every risk transfer instrument was designed to trigger for every storm event.

Jamaica builds on parametric disaster risk financing for 2025. Cat bond remains core was published by: www.Artemis.bm
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As South Asia faces escalating threats from extreme weather events, the World Bank Group is urging policymakers to scale up innovative financial tools such as weather-index insurance to help households and businesses manage climate risks more effectively.

In a newly released report, From Risk to Resilience: Helping People and Firms Adapt in South Asia, the World Bank identifies insurance, particularly weather-indexed insurance, as an important component of private sector adaptation to climate shocks.

The region, which is home to nearly two billion people, is projected to see 89% of its population exposed to extreme heat and 22% to severe flooding by 2030.

While the World Bank’s report finds that awareness of climate risks is high, with more than 60% of households and firms across South Asia having experienced extreme weather in the last five years, and more than 75% expecting weather shock in the coming decade, most adaptation strategies remain basic.

In fact, a vast majority rely on low-cost measures such as raising house foundations or improving ventilation, with limited uptake of advanced solutions like climate-resilient agricultural inputs or insurance-based risk transfer.

To close this gap, the report recommends that governments choose to prioritise reforms to improve access to climate information and promote the uptake of market-based tools like weather-indexed insurance.

The World Bank notes that these policies, alongside broader development efforts, can help mitigate financial losses from climate-related disasters and incentivise proactive adaptation.

“The urgency is growing. People and firms are already adapting, but they are doing so with limited tools and few resources,” commented Martin Raiser, World Bank Vice President for South Asia.

“Governments must act quickly to remove the barriers that prevent more effective adaptation. This includes removing distortions in land and labor markets, expanding access to finance and investing in public infrastructure to support people and businesses as they respond to climate risks,” Raiser added.

Insurance coverage in South Asia’s agricultural sector remains limited, despite the potential of weather index insurance and climate-smart farming practices to help build resilience. However, market imperfections, including limited access to credit and financial market constraints, are impeding broader adoption.

“Private sector adaptation could reduce one third of the region’s projected climate damage, but this requires governments to strengthen enabling environments,” added Franziska Ohnsorge, World Bank Chief Economist for South Asia.

Ohnsorge continued: “Adaptation is most effective when markets function well and when essential services like transport, water, healthcare, and digital connectivity are widely accessible.”

Furthermore, the World Bank’s report also highlights how targeted public investments in early warning systems, resilient infrastructure, and social protection, can complement private risk management approaches and create the foundation for scalable insurance markets.

“In Bangladesh, investments in early warning systems and cyclone shelters have helped reduce fatalities during major storms. In India, cities like Ahmedabad are leading with heat action plans to protect urban populations from rising temperatures. They demonstrate how targeted investments, and effective institutions can help scale up local adaptation successfully,” the World Bank Group said.

The World Bank Group’s findings underscore the importance of an integrated adaptation strategy that includes financial innovation, targeted infrastructure investment, and supportive regulatory environments. Among the tools identified to support resilience, weather-index insurance features as a potentially valuable mechanism to help households and firms manage the economic impacts of more frequent and severe weather events in South Asia.

World Bank highlights weather-index insurance to raise South Asia climate resilience was published by: www.Artemis.bm
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The Board of African Risk Capacity Limited (ARC Ltd), the financial affiliate and parametric insurance underwriting entity of the African Risk Capacity (ARC) Group, has announced the appointment of David Maslo as interim CEO, effective June 16th, 2025.

Maslo, a seasoned leader across the sector, brings a strong combination of actuarial expertise and policy insight towards his new role.

He also holds professional designations including Chartered Property Casualty Underwriter (CPCU), Associate in Reinsurance (ARe), and a certification in Insurance-Linked Securities.

Maslo returns to ARC Ltd after serving as Chief Risk Management Officer at the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC), where he oversaw risk management for 30 members across the Caribbean and Central America.

Under his leadership, CCRIF managed over $1.5 billion in disaster risk and delivered record payouts to member governments and state-owned entities.

Maslo’s history with the ARC Group began at the ARC Agency, before he joined ARC Ltd as an Underwriter and Financial Analyst.

In that role, he played a key part in supporting the underwriting of parametric insurance and reinsurance placements, including technical analysis and pricing, as well as contributing towards the development of new risk transfer solutions, notably parametric insurance products for tropical cyclone, riverine flood and outbreak & epidemic.

He later served as Head of ARC’s Business Development function, where he was instrumental in launching ARC’s non-sovereign business, as well as helping to secure major initiatives such as the REPAIR program, Malawi’s social protection cover, and various agricultural microinsurance solutions.

David Maslo appointed interim CEO of African Risk Capacity Ltd was published by: www.Artemis.bm
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