Jamaica plans to restore its catastrophe bond coverage ahead of the Atlantic hurricane season, according to experts.
They expect the country to raise around US$150 million in new parametric protection.
“I am aware of the Government of Jamaica’s efforts to secure new financing from international capital markets for another catastrophe bond, under the World Bank’s Capital-at-Risk programme,” said Everton McFarlane, executive director of the Insurance Association of Jamaica. “The amount sought is US$150 million in parametric cover for named storms and hurricanes, beginning in May 2026.”
McFarlene said that the 2025 cat bond worked as designed, providing fast liquidity support based on the storm’s intensity.
“While the amount would represent only a fraction of the total cost of direct and indirect economic damage and losses, the liquidity provided was crucial to provide resources for early recovery efforts and to cushion the short-term fiscal impact of the event,” he stated. “The longer-term recovery imperatives can then be programmed in a deliberate way over subsequent fiscal years without disrupting the underlying path to fiscal sustainability.”
London-based catastrophe bond specialist Artemis reported on April 30 that Jamaica is seeking US$150 million through the World Bank’s International Bank for Reconstruction and Development, with Swiss Re structuring the transaction and coverage extending through four hurricane seasons to May 2030. Price guidance is in the range of 6.5 to 7.25 per cent annually, Artemis said, citing sources familiar with the proposed deal.
The Ministry of Finance acknowledged the Financial Gleaner‘s queries on the bond but did not immediately respond to them. A World Bank spokeswoman for Caribbean affairs, Penny Bowen, said she had “nothing to add” on the reported transaction, though she noted that “the Government of Jamaica is pursuing the inclusion of Climate Resilient debt clauses into eligible projects”.
The new bond would replace coverage lost when Jamaica’s 2025 catastrophe bond paid out its full US$150 million following Hurricane Melissa — the strongest storm in the country’s recorded history. The Planning Institute of Jamaica has placed total damage, losses, and associated costs from Melissa at US$12.23 billion, equivalent to 56.7 per cent of Jamaica’s 2024 GDP and more than four times the dollar-value toll of Hurricane Gilbert in 1988, according to PIOJ Director General Dr Wayne Henry.
Under the proposed new bond, any payout would be made on a linear sliding scale ranging from a minimum of 30 per cent of principal to a full 100 per cent for the most severe events, with the trigger based on a storm’s central pressure and track through parametric boxes covering Jamaica and the surrounding Caribbean Sea. Artemis reported the probability of the bond being triggered at 3.86 per cent — up from 2.34 per cent on the 2024 issuance — reflecting a market reassessment of Jamaica’s hurricane exposure in the wake of Melissa.
The catastrophe bond is one component of a broader US$662-million liquidity framework that Jamaica activated following Melissa. The package included US$91 million from the Caribbean Catastrophe Risk Insurance Facility, US$300 million from an Inter-American Development Bank contingent credit facility, US$37 million from the Government’s own disaster reserve funds, and a Cat DDO initially drawn at US$42 million and scalable to US$84 million.
Finance Minister Fayval Williams has pointed to Jamaica’s post-Melissa credit ratings as evidence that the framework delivered. “Having these buffers against natural disasters is an important underpinning when international rating agencies assess Jamaica’s creditworthiness,” she said in her opening address to the 2026-27 Budget Debate. Moody’s upgraded Jamaica to Ba3 from B1 following the storm — a rare sovereign upgrade in the aftermath of a major natural disaster — while Standard & Poor’s and Fitch each affirmed their BB ratings with stable outlooks.
