The World Bank has once again entered the catastrophe (cat) bond market, this time providing financial protection to the Government of Jamaica against named storm events. Priced at US$150 million, the cat bond will offer insurance coverage to Jamaica for four hurricane seasons. According to the World Bank, Jamaica was the first small island state to independently sponsor a cat bond, highlighting the country's proactive approach to disaster risk financing.
Dr. Nigel Clarke, Minister of Finance and the Public Service for the Government of Jamaica, expressed gratitude for the support received, stating, "Jamaica is pleased to have sponsored the second catastrophe bond in the international capital markets protecting Jamaica against natural disasters with the much appreciated support and assistance of the World Bank."
Jorge Familiar, Vice President and Treasurer of the World Bank, commended Jamaica's comprehensive disaster risk strategy, of which the cat bond renewal is a critical part, stating, "Jamaica is proactively protecting its fiscal position against risk in a manner that could become a model for other countries vulnerable to natural catastrophe risk."
Lilia Burunciuc, Country Director for Caribbean Countries at the World Bank, emphasized the importance of preparing for disaster impacts in vulnerable regions like the Caribbean, stating, "The World Bank is pleased to support Jamaica’s catastrophe bond, which will help the country respond and rebuild quickly in the event of an impact."
The cat bond issuance was facilitated by Aon Securities and Swiss Re Capital Markets, with the bond set to be listed on the Hong Kong Exchange. Paul Schultz, CEO of Aon Securities, expressed his commitment to supporting Jamaica's initiatives in the capital markets, while Jean-Louis Monnier, CEO of Swiss Re Capital Markets Corporation, highlighted the transaction's contribution to disaster relief efforts and resilience building.
The catastrophe bond will cover hurricane seasons from 2024 to 2027 and is structured under IBRD's "capital at risk" notes program, demonstrating a collaborative effort to transfer risks related to natural disasters to the capital markets. The bond's parametric structure ensures that funds are readily available to finance insurance payouts to Jamaica in the event of a severe tropical cyclone meeting specified criteria.
Investors from various regions and sectors participated in the cat bond, reflecting a diverse geographic and investor distribution. The bond's terms and conditions outline the coverage against named storms, the trigger type, and other relevant details for potential investors.
The World Bank emphasized that the net proceeds of the bonds are not earmarked for specific projects or programs, and investing in the bonds involves a high degree of risk. The offering of the bonds will be based on relevant documentation, and restrictions apply to the transferability of the bonds.
For further information, interested parties can contact the World Bank Treasury's Investor Relations and Sustainable Finance department at debtsecurities@worldbank.org.