Olympus Insurance Secures $120 Million in Catastrophe Bond Protection

Olympus Insurance has successfully secured $120 million through catastrophe bond protection, diversifying its reinsurance strategy by tapping into capital markets via the Bermuda-based special purpose vehicle, Abacab Re Ltd. This transaction involved Series 2026-1 Class A notes compliant with Rule 144A, targeting qualified institutional buyers. These notes provide three years of fully collateralized, indemnity-based named storm coverage per occurrence, effective from June 2026 through May 2029.

This financial maneuver complements Olympus Insurance's traditional and statutory reinsurance arrangements. Initially launched at $100 million, the offering saw robust investor interest, increasing by 20% and settling at a pricing of 6.25%, significantly below the initial price guidance midpoint of 7.75% to 8.50%.

In comparison, another Florida-based insurer, Florida Peninsula Insurance, issued its Palm Re 2026-1 catastrophe bond earlier in the year. It priced at 5% against guidance between 5.75% and 6.25%, with an expected loss of 1.37% versus Olympus' 1.66%. This illustrates varied risk profiles and Olympus's emerging status as a first-time market participant.

The market for catastrophe bonds remains strong, with a first-quarter issuance in 2026 reaching $6.7 billion and an outstanding volume of approximately $63.9 billion. Swiss Re anticipates continued robust issuance throughout the year, as cat bonds stand out as a preferred multi-year reinsurance solution.

Investor confidence is buoyed by the recent stability of catastrophe bonds. Despite global insured losses of $108 billion in 2025, per Munich Re, impairments were minimal. For instance, the Los Angeles wildfires caused roughly $40 billion in insured losses but resulted in only about $250 million in cat bond impairments. Fitch Ratings forecasts stable growth in alternative reinsurance capital, supported by a strong investor base.

Olympus Insurance's robust reinsurance program surpasses the standards set by Demotech, the rating agency overseeing most Florida insurers. Demotech requires first-event coverage up to a 1-in-130-year event, representing a 0.8% annual exceedance probability. Olympus's coverage is reported to withstand any storm in Florida's history, including the 1926 Great Miami Hurricane, even extending to potential third and fourth events beyond these minimums.

CEO Tim Stroble noted that this initiative enhances capital sources while strengthening the company's capacity to manage extreme events. Beneficial market conditions, marked by reinsurer profitability over the past three years, support protection expansion and subsequent policyholder rate reductions initiated in February.