US flood programme NFIP ups 2024 coverage to $1.9bn with $575m cat bond
US catastrophe management agency FEMA has now transferred $1.92 billion of its flood risk from its flood insurance programme NFIP to the private sector ahead of the 2024 hurricane season, adding $575 million via a fresh tranche of FloodSmart Re cat bonds.
The new 3Y bond for flood agency NFIP will cover 10% of losses between $8 and $9 billion and 23.75% of losses between $9 and $11 billion. FEMA will pay about $85.7 million in premiums, excluding initial expenses, for the first year of reinsurance coverage.
“FEMA has successfully secured favourable terms for this year’s capital market reinsurance and retained our current level of reinsurance coverage at acceptable rates,” David Maurstad, FEMA’s assistant administrator for the Federal Insurance Directorate, said of the latest deal.
The new tranche adds to $725 million in NFIP outstanding issuance, including $275 million from March 2023 and $450 million from February 2022, for a total sum now outstanding of $1.3 billion.
Adding on the January 2024 traditional reinsurance placement, FEMA has transferred $1.92 billion of the NFIP’s flood risk to the private sector ahead of the 2024 hurricane season, the agency said. Counting out the listed cat bonds, the sum implies a traditional placement at $620 million.
FEMA and NFIP worked with Hannover Re for cat bond structuring, the agency noted.
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