The Reinsurance Daily

Fermat's Twin $3Bn Funds Signal ILS Maturity as Brookmont ETF Courts Retail Investors

By The Reinsurance Daily Editorial ·

Fermat's Twin $3Bn Funds Signal ILS Maturity as Brookmont ETF Courts Retail Investors

Reask Models Pre-Landfall Parametric Payouts for Loss Mitigation

A study by catastrophe modeler Reask demonstrates the financial viability of pre-landfall parametric triggers for tropical cyclones. The analysis found that **87%** of historical landfalling US hurricanes were forecast with sufficient accuracy to enable pre-emptive protective actions funded by such a trigger. Depending on the specific mitigation effort, such as installing storm shutters or evacuating equipment, the model indicates a potential reduction in ultimate insured losses ranging from **8%** to as high as **90%**. This structure provides immediate liquidity for loss prevention, a sharp contrast to traditional indemnity covers which pay out post-event. The findings provide a quantitative basis for structuring parametric cat-in-a-circle products that finance resilience measures before a storm strikes.

Fermat UCITS and Offshore Cat Bond Funds Each Surpass $3Bn in Assets

Fermat Capital Management has achieved a significant scale milestone, with both its flagship offshore catastrophe bond fund and its UCITS-compliant fund individually surpassing **$3 billion** in assets under management. The Fermat CAT Bond Fund (UCITS) grew its AUM by **$530 million** in the first half of the year alone. The growth reflects sustained institutional demand for cat bond assets, driven by high yields and low correlation. The firm's combined cat bond AUM now represents a substantial portion of the entire market. The UCITS fund's composition shows a strategic allocation, with **35%** invested in private transactions (cat bond lites), offering a yield pickup over publicly syndicated 144A bonds.

Fermat’s total catastrophe bond assets under management have now expanded from $2.12 billion at the start of this year by 44% to now sit at over $6 billion across the two fund strategies.

Brookmont Cat Bond ETF Moves to Texas Exchange to Boost Liquidity

Brookmont Capital Management is relocating the listing of its cat bond ETF, the Procure Point Shipping Cat Bond ETF (ticker: BMAR), to the new Texas Stock Exchange (TXSE). The fund, which currently has **$95.6 million** in AUM, is approaching its **$100 million** target. The move is contingent on the TXSE's successful launch and is aimed at improving trading liquidity. As part of this strategy, Brookmont is actively seeking a lead market maker (LMM) for the fund. The firm has indicated it is willing to offer an LMM a fee of up to **10 basis points** on assets to ensure tighter bid-ask spreads and facilitate larger block trades. This initiative represents a clear effort to make the cat bond asset class more accessible and efficient for a broader base of non-specialist investors.

European Credit Markets Disregard Physical Climate Risk Data

Despite rising insured losses from climate-linked events like drought, European corporate credit markets are largely ignoring physical climate risk. Analysis by Bloomberg indicates that despite events causing damages like a **$542M** wildfire loss, there is no discernible risk premium being priced into the bonds of exposed companies. Of the most vulnerable European corporate bonds, less than **1%** have shown any spread widening attributable to climate factors. This dislocation suggests that credit rating agencies and bond investors are either not accessing or not acting on the same risk data that is fundamentally reshaping property catastrophe reinsurance pricing and underwriting. The findings point to a significant information arbitrage between the reinsurance and credit markets.

Nepal Glacier Collapse Underscores Unmodeled Secondary Peril Risk

The recent deadly flood in Nepal, triggered by a glacial lake outburst, highlights a significant and underinsured secondary peril in the Himalayan region. The event, which followed the collapse of a portion of the Lhonak glacier, caused damage estimated to exceed **$100M** and washed away a major hydroelectric dam. According to the International Centre for Integrated Mountain Development (ICIMOD), such events are becoming more frequent as regional temperatures rise. With **65%** of Nepal’s population reliant on agriculture, the economic and social consequences of these climate-driven hydrological events are severe, representing a major protection gap that is not systematically captured in standard catastrophe models.

Delaware Subsidizes Export Credit Insurance for Small Businesses

Delaware's state government is actively subsidizing the cost of trade credit and other export-related insurance for small and medium-sized enterprises through its Strategic Export Program. Managed by Export Delaware, the program provides grants of up to **$10,000** per company to cover costs associated with entering or expanding in foreign markets. The program's budget is approximately **$10 million**. According to Export Delaware Director Helana Rodriguez, the initiative is designed to de-risk international expansion, with insurance premiums being an eligible expense. This public-private partnership effectively lowers the barrier to entry for smaller firms to purchase products like accounts receivable insurance, directly stimulating demand for specialty insurance lines. For every **$1** invested, the program has historically generated **$117** in new exports.

Key Takeaways

Sources

Reask study shows how pre-landfall parametric triggers fund pre-storm protective actions — artemis.bm
Fermat UCITS and offshore catastrophe bond funds each surpass $3bn of assets — artemis.bm
Brookmont cat bond ETF listing moving to Texas, as it targets lead market maker for fund — artemis.bm
Europe’s Credit Markets Shrug Off Climate Risks Despite Devastating Droughts — insurancejournal.com
Glacier Collapse Behind Nepal Flood Shows Region’s Climate Risk — insurancejournal.com
Delaware Helps Firms Pay for Insurance, Trade Shows, Travel to Grow Exports — insurancejournal.com