FEMA’S CAT BOND FOR NFIP GROWS TO $575M

The FloodSmart Re Ltd (Series 2021-1) catastrophe bond that the US Federal Emergency Management Agency launched last month on behalf of the National Flood Insurance programme has upsized owing to investor demand to $575m from an initial size of $350m, boosting the NFIP’s total reinsurance programme to a record $2.93bn, Artemis.bm has reported. Under the deal, FEMA entered into a three-year reinsurance arrangement with Hannover Re (Ireland) Designated Activity Co, with Hannover Re serving as sponsor of the FloodSmart Re notes and in turn transferring $575m of the NFIP’s flood risk to investors. FEMA said it will pay $79.4m in premiums for the deal’s first year. The upsized issuance is more than enough to replace a $500m FloodSmart Re issuance from 2018 that matures in August. Meanwhile, US catastrophe property insurer Palomar Holdings has returned to the cat bond market with the Torrey Pines Re Pte Ltd (Series 2021-1) issuance to secure $300m in earthquake reinsurance covering exposures in all 50 states over three years. The two-tranche deal is being issued from Singapore.