27 AUGUST 2026
Catastrophe (Cat) bonds are insurance-linked securities that pay investors an attractive coupon in return for accepting the risk of losing some, or all, of their principal if a specified natural disaster (such as a hurricane or earthquake) occurs.
The Atlantic hurricane season is typically the dominant risk for the asset class.
Peak hurricane season occurs between August and October each year. The 2026 Atlantic hurricane season forecasts are for a below average season, with 5 hurricanes and 2 major hurricanes currently anticipated.
This is below the 10-year norm of 8 hurricanes and 4 major hurricanes per season.
Atlantic sea surface temperatures are running below last year’s levels and it looks increasingly likely that strong El Nino conditions will emerge to hinder the formation and intensification of Atlantic hurricanes.
Should this optimistic outlook come to pass, Cat bonds could continue to offer a steady and diversified return stream as we head towards year-end.
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Recipients considering any action based on the content of this communication should seek independent advice from a professional adviser appropriate to their individual financial circumstances. Capital is at risk, and investors may receive back less than the amount originally invested. Neither the publisher nor any of its subsidiaries or connected parties accepts any liability for direct or indirect loss arising from reliance on, or use of, the information contained in this communication.
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