Britain’s Flood Re is planning to issue more catastrophe bonds after its first £140 million ($190 million) bond attracted strong interest from specialist investors. CEO Perry Thomas said the state-backed flood insurance program will “layer up” on cat bonds, following a model used by Pool Re, the UK’s terrorism reinsurance program.

Flood Re’s March 2025 bond launch comes as the UK government estimates 6.3 million properties face flood risk, a figure expected to rise significantly. The program has been “scouring the markets” for traditional reinsurance and now seeks alternative investors to address capacity constraints. Hedge fund Fermat Capital Management participated in the initial issuance.

Cat bonds have become increasingly attractive as commercial insurers face rising costs from extreme weather. Last year saw 16 new cat bond issuers, up to eight times the historical average, with 2025 sales expected to reach $24 billion. Investors make money if predefined disasters don’t occur, and have generally outperformed corporate bonds over the past five years. Thomas noted that for the next issuance, “I’ll build that investor base. It’ll get bigger, and bigger and bigger, I hope.”