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Florida attractive, as it trades above overall cat bond market spread: Tenax Capital

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Tenax Capital, the London based asset manager that operates a UCITS cat bond strategy, considers Florida exposed catastrophe bonds more attractive now, seeing improvements in the insurance environment there and an excess spread available for its allocations, compared to cat bonds for certain other regions.

A year ago, Tenax Capital was carefully watching Florida insurance and reinsurance market developments and was encouraged by the claims experience associated with 2024 hurricanes, which has encouraged the investor to allocate more capital to cat bonds covering the state in 2025.

Artemis spoke with Tenax Capital insurance-linked securities (ILS) portfolio managers Toby Pughe and Marco della Giacoma to learn more about their growing confidence in Florida.

Pughe began, “In our view, Florida remains attractive from both a pricing perspective and due to its continuously improving legal environment. While last year we preferred to stay on the sidelines — waiting for a test of the new regulatory framework and to ride out the anticipated active hurricane season — we now consider Florida wind an attractive risk to add to the portfolio.

“It has always been a ‘marmite’ state, but it’s undeniable that the wind is currently in the carriers’ sails. The relatively low industry losses from Milton and Helene exemplify this. Depending on how you clean the data — Florida is still trading about 100–150 bps above the overall market spread.”

della Giacoma, continued, “Because of Florida’s concentrated risk, investors are always going to be wary. But we’re more concerned about states with relatively poor risk standards, where even a low industry loss could trigger bond defaults or significant mark-to-market volatility. Whether it makes sense to add lower-quality risks simply because they aren’t in Florida – or because a fund is of a size where it’s required to do so – is up for debate.”

Further explaining the Tenax strategy Pughe said, “Index bonds have tightened, and there will always be someone at the back of the room shouting, “But I can’t keep fattening my tail!”. But, if the choice is between overweighting tail risk or taking on what we typically describe as frequency risk (e.g., secondary perils or poorly modelled risk), the decision ultimately comes down to balancing return stability (historically speaking) with the potential for unexpected volatility from frequency risk.”

Overall, Tenax Capital remains encouraged with the state of the catastrophe bond market, but believes that discipline must be maintained.

“Although spreads have tightened over the past 12–18 months, the most important factor for us is that the underlying terms and conditions remain healthy,” della Giacoma told us.

“We don’t mind sacrificing a bit of premium as long as these terms remain favourable.

“Our focus is on maintaining discipline throughout the cycle and avoiding the rinse-and-repeat mistakes the market tends to make.”

Florida attractive, as it trades above overall cat bond market spread: Tenax Capital was published by: www.Artemis.bm
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US property cat reinsurance rates to stabilise at mid-year renewals, says Moody’s

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Following a mixed pricing environment at the January 1st, 2025, reinsurance renewals, analysts at Moody’s anticipate property catastrophe reinsurance pricing to stabilise somewhat at the upcoming US mid-year renewals, driven by the impacts of Hurricanes Helene and Milton, and the more recent California wildfires.

In a new report, Moody’s noted that several key reinsurance brokers and European carriers have provided updates on their experience at the January 1st renewals, which is when typically between 40% and 60% of a global reinsurer’s portfolio is renewed, including much of the European business.

Among the big four European reinsurers, all except Munich Re, which saw a decline due to underwriting actions, reported premium growth at the renewals, as firms sought to deploy capital in a “still-attractive pricing environment,” albeit softer than a year earlier at the 1/1 2024 renewals.

Moody’s said: “Pricing across the portfolios of these European reinsurers was generally flat, ranging from a -2.1% decrease reported by Hannover Re to a 2.8% overall increase reported by Swiss Re. For its nonproportional business, SCOR reported the first pricing decease (-0.8%) since the January 2017 renewals.”

However, as reported by reinsurance broker Guy Carpenter, the US property catastrophe reinsurance segment witnessed an overall rate decline of 6.2% at the January renewals, which was the first decrease seen since the January 2017 renewal period.

Moody’s added: “Generally, pricing was largely stable in working layers – the lower levels of reinsurance used for more frequent and smaller claims.

“However, pricing was lower at the top end of reinsurance programs where there was plenty of capacity available for coverage of less frequent and larger claims, for which pricing remains attractive on a risk-adjusted basis.”

Shifting attention now to the mid-year reinsurance renewals, which particularly focuses on the US, the country has witnessed some heavy nat cat loss activity throughout the last several months.

Moody’s commented: “The upcoming midyear 2025 reinsurance renewals, which focus on the US, will be influenced by large US catastrophe loss events over the past year, particularly Hurricanes Helene and Milton and the Los Angeles wildfires, which are likely to provide support to reinsurance pricing for US exposures.”

Concluding: “Because many renewing US accounts have experienced losses from Hurricanes Helene and Milton and the recent wildfires in California, we think it is likely that US property catastrophe reinsurance pricing will stabilize, supported by the potential for significant price increases for accounts that have had sizeable losses over the past year.”

US property cat reinsurance rates to stabilise at mid-year renewals, says Moody’s was published by: www.Artemis.bm
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Florida Governor DeSantis wants to understand reinsurance cycles

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Over the last few years, there has been a significant shift in sentiment among mainstream media and politicians, who cite the cost of reinsurance coverage as a key driver of the escalating cost of property insurance in the United States and nowhere has this been more apparent than in Florida.

The cost of reinsurance has been rising, as reinsurers and third-party capital providers, including ILS fund managers, seek to get paid adequately for the natural catastrophe exposure they are assuming, having been badly impacted by catastrophe and weather losses over repeated years.

Reinsurance has become an easy target for those looking to identify a driver of rising property insurance rates for consumers, especially given how fast and far the market has hardened over the last two years.

As an international financial market dealing in billions of dollars and with offshore centers of expertise, unfortunately reinsurance also fits a narrative for those who would prefer to shift the focus of blame for problems in the US property insurance market offshore, as well.

Which means it has become a contentious issue in political circles, especially in the US states that have been most affected by natural catastrophes and severe weather.

As ever, Florida is one of those states in focus and it seems that not a week goes by without mainstream press citing the cost of reinsurance as one of the issues keeping property insurance prices high for policyholders in the state.

Of course, pinning the blame for high property insurance costs on carriers’ expenditure on reinsurance protection overlooks all of the other drivers, many of which have been issues since long before this hard market came along.

Aside from the losses and the frequency claims that had been passed onto reinsurers, before the sector reset its attachments higher and reduced aggregate coverage, there have also been significant inflationary factors that have driven exposure values sky-high, as well as the excess and amplified cost of claims being driven by litigation and an industry that burgeoned with a focus on working to inflate the quantum of property claims.

None of this is unique to Florida either. It’s just a lot of this became more accentuated as it was professionalised there, while litigation and fraudulent claims have been something quite unique to behold in the Sunshine State.

Property insurance rates were bemoaned as problematic and too high in Florida well before 2017, at which time the reinsurance market was incredibly soft compared to the state of the market today.

The situation in Florida is also accentuated by the fact some of the domestic market insurance carriers have historically been relatively thinly capitalised, compared to nationwide players and so rising reinsurance costs have hurt them much more, while rising attachments have also proven problematic to their business models.

Which drove the state’s legislative to introduce more state-backed reinsurance support, which elevated the issue much higher and drove greater media awareness as well.

So, reinsurance as a topic, has been making its way up the political and media agenda and in the last year hit the state Governor’s budget, as Ron DeSantis set funds aside to pay for a study into reinsurance market cycles.

Earlier this year, Governor Ron DeSantis signed his budget for fiscal year 2024-2025, dubbed ‘Focus on Florida’s Future’.

There are a raft of insurance and risk mitigation measures within the budget, with some $237 million set aside for budget support of residential home mitigation programs and additional oversight of the property insurance market in Florida.

Within that, a small line item allocates $475,000 for contracting reinsurance industry experts to evaluate the impact of reinsurance cycles on property insurance rates.

There is no line item, that we can see, designed to pay for analysis of other factors driving property insurance rates in the state.

The property insurance market in Florida has been stabilising, with the effects of legislative reforms undertaken in recent years clearly one reason for this. While carriers capital positions have also improved, helped by a lower level of catastrophe and attritional losses last year.

This is also helping to improve conditions for buying reinsurance for carriers in the state, as seen at recent renewals.

But the fact remains, it is unfair to blame reinsurance markets for Florida’s high property insurance prices, or indeed for any other US state.

That has much more to do with the levels of exposure, inflation, values-at-risk, losses and all the aforementioned challenges with litigation, claims amplification and even outright fraud that has been seen after major losses struck the state.

We must not forget the fact Florida is ground-zero for exposure values to hurricane risk and while building codes and practices have improved, it remains true that any medium to major hurricane hitting the state can cause billions of dollars in losses for insurers and reinsurers.

At which point the reinsurance market always demonstrates its worth, as without it Florida’s insurance market would surely need to be fully-subsidised by the state government and its taxpayers.

Understanding the effect of reinsurance cycles on the rates property insurers charge in Florida is, of course, worth some effort.

Reinsurance rates go up. So too property insurance rates are likely to rise. But this has nothing to do with the true cost of doing business there, given the rapidly rising exposure and increasing values of property in the way of hurricanes, or other natural events.

The state might do better to analyse the effects of Florida specific idiosyncrasies, in the legal, adjusting, construction and repair marketplaces, as well as how those drove insurance rates higher over the last two decades.

While another worthwhile venture might be in exploring ways to buy reinsurance more efficiently, or how innovative risk transfer such as parametric triggers might be able to play a role and create different, perhaps better, economics for carriers in their interactions with reinsurers.

But understanding reinsurance market cycles and the influence they have on primary insurance rates may not lead to the kinds of learnings that can make much of a difference in the first place.

Supply and demand side factors, such as capital availability and risk appetite, are often driven by global factors, as well as local. Alongside which, there is a need for risk commensurate rates to be paid for both insurance and reinsurance. Subsidising that is not an industry concern, but the industry can provide solutions that might help add efficiency through pooling of risk and leverage of efficient sources of risk capital.

This market has itself been trying to understand reinsurance cycles for decades and in recent history many extremely well-qualified participants thought the reinsurance cycle was dead. That proved not to be the case, at least not in the way anyone thought.

The reinsurance cycle is alive and kicking and we’ve been trying to second-guess it for years.

We wish DeSantis and his team luck and hope they’ll share the findings from their chosen consultants.

I’m sure many reinsurers and ILS funds that deploy billions in capital to support Florida’s property insurance marketplace and the state’s inhabitants would welcome that too.

Florida Governor DeSantis wants to understand reinsurance cycles was published by: www.Artemis.bm
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Reask hires Joss Matthewman from Moody’s as Chief Revenue Officer

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Reask, the catastrophe modelling, climate analytics and data specialist, has announced that it has appointed Moody’s Joss Matthewman as its new Chief Revenue Officer, to help support the company’s next phase of growth.

Matthewman brings extensive experience in insurance, reinsurance and catastrophe modelling, as well as a deep understanding of how models are built, applied, and scaled across global re/insurance, parametric insurance, and insurance-linked securities (ILS) markets.

He joins the organisation from ratings agency Moody’s (previously RMS) where he spent four years as Senior Director of Climate Change Product Management & Strategy, responsible for driving go-to-market and product strategy across all climate change products.

Prior to joining Moody’s, Matthewman worked at specialist insurer and reinsurer Hiscox, where he held the role of Group Head of Catastrophe Exposure Management, overseeing the the groups catastrophe risk exposure across all exposed lines of business.

In addition, Matthewman started his career by working as a catastrophe model developer at RMS, where he held various roles leading model development across hurricane wind and storm surge risk.

Reask said that Matthewman’s unique experience in re/insurance and catastrophe modelling go-to-market strategy, coupled with the firm’s product market-fit made him the clear choice to spearhead the company’s next phase of customer-centric growth.

Addressing his appointment, Matthewman said: “With their demonstrated expertise in catastrophe risk and cutting-edge innovation, I am delighted to be joining Reask. I very much look forward to having this opportunity to help drive continued growth of the company.”

Jamie Rodney, CEO of Reask, commented: “Joss is a rare and exceptional talent having worked across the entire value-chain of building, buying and selling models. Coupled with his deep curiosity and ability to provide extreme weather data solutions that do not exist today, there is no one better positioned to understand the challenges our customers face. Joss’ expertise will be key in delivering value and maximising our product-market fit as we enter our next phase of growth.”

Reask hires Joss Matthewman from Moody’s as Chief Revenue Officer was published by: www.Artemis.bm
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Yokahu launches parametric risk exchange for London re/insurance market

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Yokahu, an insurtech and Lloyd’s Coverholder, has announced the launch of a parametric risk exchange platform for the London insurance and reinsurance market, aiming to seamlessly connect brokers, carriers, and data providers to streamline parametric risk transfer transactions.

Yokahu believes that its launch of cat-risk.com will reduce friction in the market when it comes to trading in parametric insurance or reinsurance arrangements, while ensuring fast, transparent payouts when catastrophic events strike.

The company says that it has built its new parametric risk exchange with a goal to enhance the market, rather than disrupt it, transforming what can be a slow and high-friction process to allow for rapid quote and bind times, while offering real-time risk assessment, pricing and importantly seamless capacity allocation to parametric opportunities.

The cat-risk.com platform will enable multiple carriers to co-insure parametric risks that are placed on the platform, based upon the individual risk appetites of capital providers.

So it appears that capital will be able to express its risk appetite for deals, to win access to parametric opportunities through Yokahu’s new parametric risk exchange.

As a Lloyd’s Coverholder, Yokahu will administer each carrier’s portfolio separately and discreetly, allocating capacity to the deal presented using “BiPar principles in a manner that reflects the traditions of trading at Lloyd’s but in a digital context,” the company said.

Yokahu explained that, “This allows more risk carriers to enter the parametric climate resilience market with smaller initial lines and reduced portfolio volatility.”

Policy triggering will be automated through the digital parametric risk exchange, with any claims instantly presented for approval to carriers reducing claim payment times to as little as 48 hours.

The platform has been launched with support for extreme weather risks, including hurricanes, typhoons, and storms, with limits up to $5 million per transaction, but the goal is to include earthquake coverage and higher limits, as well as enhanced risk insights from data partners.

Yokahu said the platform launch already sees leading data providers such as Reask involved, while it is being supported by major capacity providers and top-tier brokers as well.

Tim McCosh, Founder & CEO of Yokahu, commented, “Parametric insurance has long been heralded as a solution for fast, reliable disaster payouts, but inefficiencies in placement have hindered adoption. With cat-risk.com, we are delivering on the promise of parametric insurance – removing barriers, improving accessibility, and ensuring resilience in the face of growing climate and disaster risks.”

Farid Tejani, Co-Founder of Yokahu, added, “This is about evolution, not revolution. cat-risk.com enhances the existing parametric insurance ecosystem, making transactions smoother, data integration stronger, and payouts faster. We believe this will help unlock the full potential of parametric insurance for businesses, governments, and communities worldwide.”

Yokahu CFO, Carsten Wolheimer, further stated, “cat-risk.com is an important step forward in combining financial markets expertise with innovative parametric risk transfer. By streamlining transactions and leveraging robust financial market principles, we are creating a more efficient, transparent, and scalable solution for disaster risk transfer, fully aligned with Yokahu’s vision for a digital insurance marketplace that delivers real impact.”

Digitally connecting parametric risk transfer opportunities from cedents more directly and efficiently to risk capital providers is a natural evolution for the market and one that has been gaining increasing attention, with other platforms already available that seek to address this.

Yokahu, with its Lloyd’s Coverholder focus, can channel parametric risk through its platform to Lloyd’s capital providers, which could help to make parametric opportunities more readily accessible, while also enabling cedents to get access to broader panels and more competitive capital, as well as offering faster payouts and digital monitoring of risk transfer arrangements.

Yokahu launches parametric risk exchange for London re/insurance market was published by: www.Artemis.bm
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AI-powered parametric platform Mythen launched by DeSilva in Bermuda

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Insurance technology veteran Sandra DeSilva has announced the launch of Mythen, an artificial intelligence (AI)-powered parametric insurance platform and reinsurer, based in Bermuda and Texas, that specialises in writing natural catastrophe risks.

Mythen, is comprised of a team of global insurance, reinsurance and technology experts who aim to leverage advanced technologies in order to provide liquidity and coverage for otherwise difficult to insure risks.

According to the announcement, Mythen’s multi-disciplinary team of industry veterans will use AI, machine learning, underwriting, modelling, remote sensing, and other technologies for developing insurance products, structuring coverage, and taking risk.

“We are using the latest technologies and working with highly-skilled partner companies to penetrate deeper into the insurance market with products across the natural and other catastrophe risk spectrum,” commented DeSilva.

She continued: “We are motivated to help combat climate change and close the widening insurance gap by providing the technology to administer global portfolios subject to climate risk and uncertainty.

“I am delighted with the team as we are addressing critical social and environmental needs.”

Moreover, Mythen Holdings Bermuda oversees Mythen Insurance Services, and is made up of a Texas-based managing general underwriter (MGU), as well as a claims service unit, Mythen Claims Services, and Mythen Re, which is a Bermuda Class 3a insurer which has a fully collateralized Bermuda segregated cell, Eiger 2025.

The organisation has ambitions to help alternative reinsurance capital sources, including those from the insurance-linked securities (ILS) market, access more risk in parametric form.

Therefore, by offering structured parametric solutions, Mythen seeks to bridge the gap between ILS investors and natural catastrophe risk, which will ultimately help create new opportunities for efficient capital deployment.

In addition, Mythen has also partnered with Texas-based insurer Southlake Specialty Insurance Company, which provides paper, fronting, and leverage, while the MGU enjoys quota share coverage from partners in the wider reinsurance market.

“Mythen’s parametric solution is a prime example of Southlake’s dedication to innovation and the use of technology to drive the insurance industry forward. Sandra’s team is addressing the critical challenge of providing first-dollar coverage in a complex market. After seeing the demo, we immediately recognized its potential to revolutionize how businesses manage wind exposure—and knew we had to be part of it,” said Yogesh Kumar, CEO of Southlake.

At the core of Mythen Insurance Services is a technology platform that links data, risk analytics, and forecasting expertise to manage portfolios and covering insurance risk.

The company has begun underwriting windstorm risk, namely US hurricane risk, utilising parametric trigger products designed to minimise the time time to pay claims as well as keeping internal expenses low.

Engineered for simplicity and accessibility, the product is tailored for brokers and clients, ensuring seamless adoption.

At the same time, Mythen’s WindSpeed™ technology and online platform enables instant quoting, portfolio management, while also allowing for upscaling risk and seamless hedging.

AI-powered parametric platform Mythen launched by DeSilva in Bermuda was published by: www.Artemis.bm
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Technology to drive growth in parametric ILS market: Ramseier, Twelve Securis

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Urs Ramseier, Chief Executive Officer of insurance-linked securities (ILS) manager Twelve Securis, expects significant growth in the parametric ILS market as technological advances enhance data quality, modelling, and trigger precision, creating new opportunities for business interruption coverage and protection where traditional insurance and reinsurance solutions are lacking.

At the Artemis ILS NYC 2025 conference, AM Best spoke with Ramseier about the current state of the parametric ILS marketplace.

He explained that parametric ILS has primarily been part of the catastrophe bond space, including those issued by the World Bank. However, a growing number of private parametric ILS transactions are now entering the market, which Ramseier views as a positive development offering new opportunities for investors.

Ramseier highlighted the advantages of parametric ILS structures over traditional ones.

“Parametric is clear in terms of trigger,” said Ramseier. “There is no risk of trapped collateral, and this means that internal rate of returns are superior to indemnity transactions, because you don’t have the dilution of the risk premium when the collateral is trapped, you have certainty on the liquidity.”

He added, “So basically, we can offer higher liquidity terms for our investors on the fund level, and you don’t have side pockets on commingled ILS funds.”

Ramseier also emphasised the role of technology in driving the growth of parametric ILS.

“I think technology is the key driver behind it. More power to compute these models, better data—this is really the driver of parametric development in insurance, reinsurance, and also the ILS space,” he noted.

He addressed a common misconception that parametric structures carry significant basis risk—the gap between an event occurring and a payout being triggered—explaining that technological advancements are helping to minimise this.

“A lot of people think there is a lot of basis risk for the buyer of ILS solutions, but I think with this technology, we can reduce or mitigate the basis risk a lot. Getting the trigger closer to the exposure is a development that has only become possible due to this better technology we have,” said Ramseier.

Looking ahead, Ramseier anticipates massive growth in the parametric space, opening up new demand for business interruption coverage and protection in areas where traditional insurance and reinsurance markets currently lack solutions.

The full AM Best interview with Twelve Securis’ CEO at Artemis ILS NYC 2025 is embedded below.

Technology to drive growth in parametric ILS market: Ramseier, Twelve Securis was published by: www.Artemis.bm
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Porch agrees $7.1m settlement with Vesttoo Creditors Liquidating Trust

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Porch Group, the owner of insurer Homeowners of America Insurance Company (HOA) which was impacted by the Vesttoo reinsurance letter of credit (LOC) collateral fraud, has agreed a $7.1 million settlement over constructive trust claims with the Vesttoo Creditors Liquidating Trust, court documents show.

An order has been entered in the Delaware bankruptcy court approving a Stipulation between the Vesttoo Creditors Liquidating Trust and Porch in the Chapter 11 case.

It relates to so-called constructive trust claims related to a reinsurance transaction for HOA that utilised a specific White Rock cell and under these claims, which had been disputed by the bankruptcy Trust, Porch had asserted entitlement to $15,011,392.70 in cash held by the Liquidating Trust.

The Trust continues to dispute Porch’s assertions, but the court order states that “to avoid the substantial risks and expenses of litigation, the Parties have negotiated this Stipulation in good faith and at arms’ length to resolve this dispute,” and so a settlement has been agreed.

The parties have agreed to a payment of $7.1 million for Porch to settle these claims, as a result of which Porch shall waive all future claims against the bankruptcy debtors and Liquidating Trust in the Vesttoo bankruptcy case, it seems, aside from any general unsecured claims that emerge which would then be subject to reduction due to this payment that is now seemingly due.

The settlement does not constitute any admission by any party, simply being a settlement to avoid the ongoing costs and challenges associated with any continuation of the litigation, is how we understand it.

Continuing the litigation over the constructive trust claims held by Porch could have resulted in additional costs for the bankruptcy trust, and other parties including Porch, hence finding a settlement agreement was deemed important to reduce this risk, it appears.

For Porch, the settlement adds to recoveries the company will make to cover some of the significant costs it has suffered due to the Vesttoo scandal.

For some background recall that, Homeowners of America Insurance Company (HOA), the Porch subsidiary, had been revealed as one of the first companies to be exposed to Vesttoo’s fraudulent reinsurance letters of credit (LOCs).

It has since pursued remedies in the courts to help the company recover some of the value destroyed by the Vesttoo fraud, saying it would vigorously pursue all damages caused to the firm by the incident.

We haven’t covered the Vesttoo debacle for some time, but parties impacted by the fraud, such as Porch, have continued to pursue damages in the courts to recover some of the value lost and destroyed.

Recall that Porch initially said its Homeowners of America Insurance Company (HOA) subsidiary had an exposure to reinsurance contracts arranged via Vesttoo, as a result of which the company realised a charge of $48.2 million in its second-quarter 2023 results and said it was pursuing $300 million of collateral from a letter of credit (LOC).

Porch had to replace significant HOA reinsurance limit that was affected by fraudulent letters of credit collateral and made additional investments into its Homeowners of America Insurance Company to help it recover from the episode.

The company had also agreed a $30 million strategic arrangement with Aon, that included releasing all claims related to the Vesttoo fraud that it had made against the broker.

Porch had also filed a law suit in New York against China Construction Bank Corporation, over the Vesttoo reinsurance collateral fraud, accusing the massive Chinese bank of “enabling its personnel to perpetrate a colossal fraud” on the plaintiffs.

The company had also sued broker Gallagher Re, claiming it “grossly mismanaged” the administration of the reinsurance, a case which seemingly remains in limbo at this time, while its aforementioned case against China Construction Bank had been combined with one filed by program services and fronting specialist Incline P&C Group.

The China Construction Bank and Gallagher cases continue, it seems, with no adjudication or any settlements to-date that we’re aware of. Other cases related to the Vesttoo fraud also continue, although with little progress and no further recoveries it seems at this time.

But, Porch has now secured this further $7.1 million settlement with the Vesttoo Creditors Liquidating Trust to cover some more of the damages its business has suffered, enabling it to make another recovery and close another thread in this saga for the company.

Read all of our coverage of news related to the fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo reinsurance deals.

Porch agrees $7.1m settlement with Vesttoo Creditors Liquidating Trust was published by: www.Artemis.bm
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Florida Citizens targets $2.94bn of new reinsurance and cat bonds for 2025

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Florida’s Citizens Property Insurance Corporation, the state’s insurer of last resort, is aiming to purchase $2.94 billion of new traditional reinsurance and catastrophe bonds for the 2025 hurricane season, which would take its total risk transfer to $4.54 billion this year.

Florida Citizens still has $1.6 billion of catastrophe bonds outstanding to provide protection through the 2025 hurricane season.

There is $1.1 billion of aggregate reinsurance limit available from the Everglades Re II Ltd. (Series 2024-1) cat bond that Florida Citizens sponsored in 2024, which will run through both the 2025 and 2026 wind seasons for the insurer.

In addition, Citizens still has $500 million of industry-loss based reinsurance from its Lightning Re Ltd. (Series 2023-1) cat bond that it sponsored in 2023 and which will provide coverage through the next hurricane season only, maturing early next year.

The cat bond program has provided the insurer with added certainty from its multi-year protection, on top of which it will now venture into the market to secure additional reinsurance or cat bonds up to the targeted $4.54 billion of limit.

To secure the necessary risk transfer and reinsurance protection for 2025, Florida Citizens said it is budgeting for approximately $650 million of premiums.

For 2024, the insurer had budgeted $700 million initially, compared to a projection of $695.2 million for for 2023.

The decline in premium ceded that is being budgeted for comes with the reduction in exposure Florida Citizens has experienced, as its depopulation program has taken greater effect in the last year.

Because of this reduced level of exposure, the 1-in-100 year PML is estimated at around $12.86 billion as of the end of 2024, compared to an over $17 billion projection it had for that figure in late 2023.

Recall that, Florida Citizens had reported its policy count as falling below 1 million by the end of November 2024. That decline has continued, with the figure dropping to 847,571 policies by the end of February 2025 and so the exposure-base falling commensurately.

Florida Citizens staff as a result propose buying total risk transfer of $4.54 billion, with the $1.6 billion of in-force catastrophe bond protection and $2.94 billion of new private risk transfer, made up of both traditional reinsurance and catastrophe bonds.

Some of the traditional reinsurance may also be from collateralized sources, as it’s typical that ILS funds participate in these layers as well.

In fact, at its 2024 renewal Florida Citizens secured almost $1.3 billion of protection that came from insurance-linked securities (ILS) and collateralized markets participation in its traditional reinsurance tower.

The 2025 risk transfer tower is expected to feature a traditional reinsurance sliver layer that sits alongside and works in tandem with the mandatory coverage provided by the Florida Hurricane Catastrophe Fund (FHCF) amounting to $394 million.

FHCF coverage is projected to be $3.548 billion in size, down on the $5.02 billion utilised for 2024, again due to the reduction in exposure.

Above that will sit a layer featuring the $1.6 billion of in-force catastrophe bonds and roughly $2.55 billion of new reinsurance and cat bonds procured for 2025, which will all be annual aggregate in nature.

You can see the proposed 2025 risk transfer tower for Florida Citizens below:

Beneath the private market risk transfer the surplus has been eroded compared to last year, effectively meaning reinsurance cover could attach from a projected $2.547 billion of losses in 2025.

At its 2024 reinsurance renewal, the Florida Citizens tower had $3.154 billion of surplus sitting in the bottom layer.

If Florida Citizens is successful in placing the targeted $2.94 billion of new reinsurance and cat bonds, giving it $4.54 billion of private market risk transfer, it says that it would expose all of its surplus and have a potential Citizens policyholder surcharge of $559 million for a 1-in-100-year event in 2025.

Citizens staff are now engaging with brokers, advisors and market participants to design, structure and price its reinsurance and catastrophe bond placements for 2025.

It’s worth remembering though, that Florida Citizens had targeted $5.5 billion of reinsurance and risk transfer in advance of the 2024 hurricane season, but only ended up buying just under $3.6 billion as it found pricing too high to maximise its protection last year.

Citizens explained that its proposed risk transfer tower for 2025, “is structured to provide liquidity by allowing Citizens to obtain reinsurance recoveries in advance of the payment of claims after a triggering event while reducing or eliminating the probabilities of assessments and preserving surplus for multiple events and/or subsequent seasons.”

Given the attractive execution seen in the catastrophe bond market for recent deal sponsors, it’s anticipated that Florida Citizens could come to market with another large new issuance in the coming weeks.

Florida Citizens targets $2.94bn of new reinsurance and cat bonds for 2025 was published by: www.Artemis.bm
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Bermuda to remain a key innovator as ILS broadens beyond cat: MultiStrat CUO

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In an interview with Artemis around the Bermuda Risk Summit 2025, Kier James, Chief Underwriting Officer (CUO) of MultiStrat, discussed how the company believes that the island will continue to maintain its dominance of the insurance-linked securities (ILS) market as it broadens beyond catastrophe-focused ILS into casualty and specialty lines of business.

Praising the island as an innovator, James of MultiStrat, the specialist underwriter, reinsurance investment facilitator and casualty insurance-linked securities (ILS) company, expressed confidence that Bermuda will remain a key driver of growth in the ILS sector for the foreseeable future.

A key example of this, that James highlights, is the Incorporated Segregated Accounts Companies Act (ISAC Act) which was enacted in 2020 and supplements the earlier Segregated Accounts Companies Act enacted in 2000.

“This demonstrates that the jurisdiction is willing to listen and engage with the industry to provide solutions. This legislation has provided the ILS market a unique and flexible corporate structure which allows for the segregation of assets and liabilities into distinct incorporated segregated accounts, offering enhanced asset protection and operational efficiency and is being embraced by the ILS industry and investors,” James explained.

At the same time, the CUO notes that the Bermuda Monetary Authority (BMA), the island’s regulatory body for financial services, has demonstrated a rigorous but pragmatic approach to supervision and regulation of the ILS market, which according to James, has helped create a “stable and reliable environment for both ILS practitioners and a jurisdiction in which investors are willing to put their money.”

He continued: “Bermuda has also created a highly efficient ecosystem within which reinsurers, ILS funds, insurance managers and legal service providers can transact business. This is exemplified by the fast-track, seven-day listing process for insurance-linked securities on the Bermuda Stock Exchange, which lists approximately 92% of the global cat bond market.

“MultiStrat believes that the island will maintain its dominance of the ILS market as it broadens beyond cat ILS into casualty and specialty lines of business. That said, no jurisdiction can afford to be complacent; casualty ILS Insurtech Ledger chose the Cayman Islands for two new entities last year.”

Moving beyond Bermuda, James also discussed what he believes are some of the biggest challenges and opportunities for the casualty and broader ILS market as it looks to expand.

“Challenges for the casualty ILS market are often based on misconceptions, partly due to practitioners not explaining the product adequately. A fear of the impact of a zero-interest environment is one concern, but duration matching of assets to liabilities means this isn’t an issue in the current high-interest rate environment and won’t be anytime soon,” James said.

He continued: “At any rate, the typical five-to-10 year duration of non-cat ILS means they will “outlive” any period of zero or negative rates. What’s more, investors aren’t limited to risk-free rate return products. Assets that can be deployed to collateralize non-cat ILS structures can generate significant returns, even in a zero-interest rate environment, and these can be enhanced by the leverage that can be created by appropriate structuring.”

Notably, James states that casualty reserve strengthening in the United States has worried some potential investors.

“However, this isn’t a cross-class, universal phenomenon but often more a reflection of an individual company’s underwriting and reserving strategy,” he added.

On the other hand, social inflation remains a challenge within US casualty, but according to James, the risk can be mitigated by skilled portfolio managers and underwriters through appropriate risk selection, structuring, curation of diversified portfolios, and by effective claims handling and legal strategies.

Moving to cat ILS funds, James explains, “one barrier to growth beyond the prevalent $10 billion or so assets under management “ceiling” is that only certain structures are appropriate for these funds. The need to be fully collateralized to limits, with the only leverage being created by the premium, which in itself may potentially incentivize riskier, high rate-on-line (RoL) transactions. Collateralization to limits makes layers with reinstatements and those with low RoL less appealing, so there’s a lack of single-shot and aggregate layers, whether in the form of cat bonds, parametric covers, ILWs, or retrocession, available at acceptable pricing.”

He added: “Geographical concentration risk – Florida comes to mind – is another challenge, but various strategies are being deployed to alleviate this, including the use of rated reinsurance fronts. Equally, continued growth of the market, including innovation in areas such as parametric cover should also facilitate continued growth.”

In addition, the CUO also highlights how there has also been some well-publicised issues surrounding the validation of collateral, which notably was a setback for the whole ILS market.

He explains that MultiStrat, as well as other companies have responded rigorously by introducing additional controls around collateral, such as secured, encrypted communication for all counterparties.

“The ILS sector is now stronger for it and confidence has returned,” James said.

As for the opportunities within the casualty and ILS market, James notes that increasingly, buyers are seeking whole-account quota share on a multi-year basis and a more diverse array of reinsurance solutions as they become more sophisticated about capital management.

Ultimately, it appears that investors are looking for superior returns and products that possess little or no correlation with wider financial markets.

“ILS will continue to help to close the gaping global protection gap across insurance classes and are applicable to multiple lines. The development of ILS-specific regulation should help the growth of the market in new centres, such as the UK,” James added.

Furthermore, James also discussed what new innovations and structures are currently emerging within the casualty ILS market.

“Casualty modelling arrived on the scene relatively late, but the modelling ecosystem is growing and improving rapidly, giving investors more confidence. Predictive analytics are helping, incorporating real-time data and historic insights, to help anticipate this rapidly changing risk.”

On the other hand, innovations within casualty ILS structuring is also generating interest and demand among investors.

According to James, these include “forward exit options, fixed commutations, and traditional legacy solutions, which can be built into the contract at the outset. These facilitate participation by series funds and those that need a finality solution in order to invest. All in all, the product is getting increasingly sophisticated and appealing to an ever-wider range of investors.”

And lastly, James also addressed whether he sees ILS capital playing a larger role in the broader casualty space in the future.

“Some casualty business will flow away from traditional reinsurers, which are giving siloed coverage for isolated lines of business, into the ILS market but in the main, casualty ILS offer a path for the entire casualty market to grow.

“Many buyers aren’t purchasing the right limits in the first place, new liabilities associated with technological innovation, climate change, or transition risk, are emerging constantly, and with social inflation pushing jury verdicts up, demand for casualty cover will continue to rise. It took cat ILS approximately 15 to 20 years to achieve a penetration rate of 30% to 40%, and we believe the casualty ILS market could get there in about half that time.”

“MultiStrat is looking forward to playing an integral part in this growth story and continued success in collaborating with brokers, cedants and investors on mutually satisfactory reinsurance opportunities in the casualty space,” James concludes.

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

Bermuda to remain a key innovator as ILS broadens beyond cat: MultiStrat CUO was published by: www.Artemis.bm
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