Florida’s Citizens Property Insurance Corporation has leaned more heavily on the catastrophe bond market for its 2025 risk transfer strategy, with CFO Jennifer Montero revealing that 70% of the insurer’s total risk transfer program, including both new and continuing coverage, is now backed by cat bonds.Speaking during Artemis’ recent , Montero shared insights into Citizens’ renewal strategy this year and the company’s evolving and growing engagement with the insurance-linked securities (ILS) market.“Heading into June 1st for the renewals, our strategy was to go out early and take advantage of the positive momentum in the market.We continue to hear from market participants that losses from the 2024 hurricanes, as well, as the 2025 wildfires were manageable for the risk transfer market.

In addition, there is tangible improvement in the Florida market, as a result of the reforms that passed in 2022,” Montero explained.These favourable dynamics led to strong engagement with investors during Citizens’ roadshow, setting the stage for its landmark catastrophe bond issuance.Citizens Property Insurance Corporation successfully priced, what at the time, became the largest catastrophe bond issuance ever seen, securing a 56% upsized $1.525 billion of reinsurance from its new Everglades Re II Ltd.

(Series 2025-1) issuance.“This year, our initial price guidance for the Everglades transaction was $975 million with room to upsize if the market conditions were favourable.The investor appetite and the pricing in the capital markets was very positive, which is why we ended up upsizing Everglades by 56% to $1.525 billion,” Montero noted.

Montero elaborated on Citizens’ broader strategy and the increasing role of ILS in its risk transfer program.“In our meetings with investors in both the capital markets and the traditional markets, the takeaway was that there’s ample capacity and cost-efficient price levels in both markets.But there were more advantageous conditions in the ILS market this year, which is why we ended up placing more than 52% percent of the $2.9 billion of new risk transfer coverage in the capital markets,” she explained.

With an additional $1.6 billion in outstanding cat bonds from 2023 and 2024, Citizens’ total catastrophe bond-backed coverage rose to 70% of its overall program this year, a significant shift from prior years.“Historically, in the cat bond market, we have not had that large of a portion of our program.But considering that this year, the cat bond market was such a better program and it provided the aggregate, multi-year, better pricing, flexible resets etc.

We felt that we benefited from being able to secure the multi-year coverage at the higher levels.Typically, cat bonds are less than 50% of our overall program and this year they’re 70%,” Montero added.Recall that, , across cat bonds and reinsurance, with $2.89 billion of new reinsurance and/or cat bonds required, alongside the still in-force deals from prior years.

Furthermore, Montero also underscored the value of collateralized structures, which she sees as offering added security in the event of major catastrophes.“As far as collateral markets go, of course all the ILS is collateralized.But on the traditional side, we only have a handful, three or four carriers, reinsurers, that are collateral markets.

However, their placement makes up 25% of the total traditional coverage that we have.“I prefer the collateralized coverage if that’s what we can get.You know it’s there.

You don’t have a problem if a great big storm hits, you don’t have to worry about whether or not reinsurers can pay out to all their cedants.“So, collateralized is always something that we like.But again, we only have about three or four of our 2025 participants that are actually collateralized, but they do make up one-fourth of the whole traditional program,” Montero concluded.

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