The US Federal Emergency Management Agency (Fema) has now secured the $450 million upper-target for its new FloodSmart Re Ltd. (Series 2022-1) catastrophe bond, Artemis has reported.

FloodSmart Re Ltd is Fema’s Bermuda-domiciled special-purpose insurance vehicle, the result of the agency’s desire over the past three years to add to, and diversify, its flood reinsurance protection.

For 2022, Fema has returned to the catastrophe bond market for a fifth FloodSmart Re transaction, which more than replaces a $300-million FloodSmart Re Ltd. (Series 2019-1) cat bond that matures in March.

Artemis said: “As a result, the overall size of Fema’s flood reinsurance programme for the (National Flood Insurance Program) NFIP will increase to $2.471 billion after that maturity and for a short time sit at $2.771 billion, until that 2019 cat bond matures.

“With the traditional reinsurance tower only $1.064 billion in size, as of this year’s renewal, the catastrophe bond market will extend its dominance as the larger source of reinsurance capacity for the NFIP.

“As a result, cat bonds will provide the NFIP with $1.425 billion of flood reinsurance protection through this year’s named storm season.”

It will cover a proportion of NFIP losses from major flood events caused by named storms, including tropical depressions, storms and hurricanes, while the protection will extend across the United States, Puerto Rico, US Virgin Islands and DC.

Artemis is the longest running news, analysis and data media service devoted to the alternative risk transfer, catastrophe bond and insurance-linked security, non-traditional reinsurance, insurance-linked investments and associated risk transfer markets.