According to sources, the U.S.Federal Emergency Management Agency (FEMA) has halted preparatory work for a planned FloodSmart Re Ltd.Series 2025-1 catastrophe bond issuance, which we’re told is as a consequence of the oversight and focus on government agencies instigated by the new U.S.

Administration.Each year since 2020, FEMA has sponsored a new FloodSmart Re catastrophe bond, to source capital markets backed flood reinsurance protection for the National Flood Insurance Program (NFIP).We already understood that a new issuance was planned and already in the works for 2025, with preparations said to be underway.But now, we’re told that work on the FloodSmart Re 2025-1 cat bond has been halted and sources said that at this stage there appear to be no immediate plans to restart the effort.

We’re told this is believed to be a result of the recent additional oversight from the Trump Administration on government spending, which has already resulted in FEMA cutting back in certain areas (mainstream media reports state), while meaningful job losses are also reportedly planned and underway for the Agency.The Federal Emergency Management Agency (FEMA) is one of the government agencies that has been impacted by cuts under the Trump Administration and through actions taken by its Department of Government Efficiency (DOGE).Media reports suggest a raft of FEMA initiatives have been cut back, come being halted altogether, while reports also suggest expected FEMA job cuts could number more than 1,000.

Our sources suggest the halting of work on FEMA’s planned FloodSmart Re catastrophe bond issuance for 2025 is due to this additional oversight and the general cuts to US government agency spend.We can’t be certain of the reasons for the cat bond work being halted and have attempted to reach FEMA for comment, but with no response received so far.As a reminder, FEMA has $850 million of FloodSmart Re catastrophe bond backed reinsurance limit in-force, while .

earlier this year, securing 22% more in protection for 2025, at just over $757.8 million.It seems reinsurance spend may now be under scrutiny, resulting in the current halt to cat bond work at FEMA.But, with FEMA’s funding under pressure, the use of private market funding through reinsurance and catastrophe bonds to protect the NFIP from the financial impact of major flood loss events seems a prudent way to protect taxpayers from the impacts of flood disasters.

So how long this halt to work on FloodSmart Re cat bonds could last is uncertain.There are, of course, bigger uncertainties over how cuts to FEMA and other agencies, such as the weather agency NOAA, could have ramifications for the insurance, reinsurance and insurance-linked securities (ILS) markets.FEMA is a core disaster response agency and operates the National Flood Insurance Program, which are critical services that help people manage and recover from disasters, including flood events.

While NOAA’s provision of critical weather data and services informs and provides forecasts, observations and insights into potentially catastrophic weather and climate disasters, with re/insurance and ILS markets heavily reliant on some of those offerings.There could be much wider-reaching ramifications from the ongoing US government agency cuts to budgets, people and services, for the risk transfer and reinsurance markets, than just the work on one cat bond being halted.Weather and risk management experts are particularly worried about cuts to NOAA weather services, with many expressing concerns over how this could impact observations around meteorological insights for key perils such as severe weather outbreaks and this year’s coming hurricane season.

We’ll update you should we learn any more on plans for future FloodSmart Re catastrophe bonds.Read all about FEMA’s ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.