June is a big month for cat bond investors because it marks the beginning of hurricane season.
Most cat bonds are tied to hurricane triggers, and it’s important for investors to understand the potential risks when a new season begins. But it’s not just hurricane season that’s on our radar. There are other major weather events unfolding in the U.S. that could have implications on the cat bond market. Let’s take a look.
2026 Hurricane Season
In April, we shared early predictions for the 2026 hurricane season. At the time, experts were predicting a relatively calm season, expecting an average of 14 named storms, 7 hurricanes, and 3 major hurricanes. For now, those predictions are holding, but it’s important to keep a weather eye on El Niño and how this climate pattern will play out over the coming months.
El Niño is when the Pacific Ocean experiences warmer-than-average temperatures, producing strong winds that hinder tropical strom activity in the Atlantic. However, it’s not just about what El Nino does, but also when it arrives. If it doesn’t arrive until late August or thereafter, there is a greater likelihood for hurricanes to form in the Gulf over the summer. That may sound concerning, but the good news is that systems that form under these circumstances are typically weaker, and if we look at previous El Niño years, the amount of named storms was low - 3 in 2023, 1 in 2015, and none in 2009. A lot goes into hurricane modeling, so be sure to stay abreast of shifting climate conditions and industry reports to better understand the possible impact on your cat bond investments.
When we track hurricane activity as it relates to cat bonds, we also need to consider where landfall, and potential damage, could occur. Historic data can show us where hurricanes have been prone to land, but that doesn’t always equate to a fair risk assessment. In a recent report by Accuweather, there are three locations that may be “overdue” for a hurricane hit: Miami, Tampa, and Southeastern New England.
What’s interesting in this report is not just the locations themselves, but what could make them devastating targets. Tampa and Miami in particular are highly-populated and have only grown in recent years, and are low-lying which makes them more susceptible to flooding. Tampa in particular narrowly escaped the direct path of Hurricane Milton in 2024, Idalia in 2023 and Irma in 2017.
In Southeastern New England, there are similar issues - densely-populated, low-sitting areas that are home to major cities like New York City and Providence. It’s a valuable reminder to investors that when you evaluate a cat bond, you need to consider the risk profile - such as topography and population density - of the geography it covers, just as much as the probability a devastating event will occur.
Growing Wildfire Concern
When we think of wildfire activity, we usually think of California. However, severe drought in the Southeastern US caused significant wildfires in Georgia, Florida, and even the Carolinas this past spring. While we don't yet know the extent of damage, it’s important to look at this from an industry perspective. As natural disasters shift in type, frequency, severity, and location, that means cat bonds too will evolve to accommodate these new threats.
Wildfire, similar to winter storms, may be considered a secondary threat for now, but perhaps not for long. These events in particular are already greatly influencing the cat bond market, reaching a record high of $4B in 2025 alone. For investors, this increased issuance could mean greater opportunities, better diversification, and better modelling going forward.
The cat bond market continues to evolve as they continue to become a risk-management tool for more than just natural disaster events - including cyberattacks, pandemics and more. That said, we believe that helping provide increased insurance coverage of natural disasters will continue to be at the heart of these assets. We also continue to believe that cat bond investors should stay mindful of how these projected events are changing and unfolding as they seek out the best investment options for their portfolio.
***
Sources:
FOX Weather
Brookmont
USA Today
Accuweather