Final elements of Florida Citizens Property & Casualty Insurance Company’s 2026 risk transfer plan show that insurance-linked securities (ILS), catastrophe bond and mortgage markets continue to dominate the insurer’s protection purchases, with identifiable third-party capital supporting more than half of traditional reinsurance allocations and nearly 90% of overall reinsurance allocations.
Two days ago, we reported that Citizens, Florida’s insurer of last resort, had successfully met its $2.82 billion private risk transfer program goal for the 2026 hurricane season, including $1.29 billion in new coverage and $1.53 billion in multi-year coverage carried over from previous years.
As recently reported, of the $1.29 billion in new protection, approximately $691 million came from traditional reinsurance markets and $600 million came from capital markets through the issuance of catastrophe bonds by Everglades Re II Ltd. (Series 2026-1).
A review of signed lines revealed participation from US, Bermudian and international reinsurers, as well as front-loading structures used by some Lloyd’s syndicates as well as ILS managers and mortgage reinsurers.
The last few lines also reveal the continued importance of ILS manager and third-party investor capital in the traditional placement itself.
Adding together participations that can be clearly identified as being backed by ILS managers, mortgage reinsurers or third-party investor capital suggests that these sources accounted for approximately $360 million, or approximately 52%, of the $691 million in traditional reinsurance placements.
Combined with the $2.125 billion in Citizens’ outstanding catastrophe bond protections, the ascertainable capital market capacity totals approximately $2.485 billion of the insurer’s $2.82 billion risk transfer program, meaning approximately 88% of the entire tower is backed by catastrophe bonds, ILS funds, mortgage reinsurance or other third-party investor capital.
That’s a slight increase from 2025, when about 87% of Citizens’ larger risk transfer towers ended up being backed by capital market sources.
Nephila Capital is the largest overall player in the legacy update. Through Markel Bermuda Limited, Nautical Management’s Lloyd’s Syndicates 2357 and 2359, and additional participation through Cavello Bay Reinsurance Limited, the ILS manager supported approximately $251.5 million in placements, representing more than 36% of the conventional scheme.
The second largest identifiable capital market-backed player is Pillar Capital Management, participating in the program through Hannover Rück SE, with a capacity of approximately $39.5 million.
Investment firm Quantedge invested approximately $18.1 million through participations led by Arch Reinsurance Ltd. and Hannover Rück SE, while DE Shaw Re (Bermuda) Ltd. invested $17 million through separate accounts.
LGT ILS Partners is also participating in the program through Lumen Re Ltd., contributing $16.65 million, while Leadenhall Capital Partners is participating through Nectaris Re Ltd., contributing $5.86 million.
Euler ILS Partners participated through Bernina Re Ltd., led by Hannover Rück SE, with just over $5 million, while Aeolus Capital Management and Eskatos Capital Management also contributed approximately $3.9 million and $2.1 million, respectively, through Hannover Rück SE.
Among traditional reinsurance players, Ariel Re’s Lloyd’s Syndicate 1910 paid out $73.1 million, followed by Partner Reinsurance Company Ltd., which paid $53.1 million, Transatlantic Reinsurance Company, which paid $52.8 million, Everest Reinsurance Company, which paid $41.8 million, and Swiss Reinsurance America Corporation, which paid $3,730. million, Odyssey Reinsurance Company, $25 million, and Munich Re. Reinsurance America, Inc., $18.8 million.
Other participants include American Family Connect Property and Casualty Insurance Company, The Cincinnati Insurance Company, Ascot Bermuda Limited, Lancashire Insurance Company Limited, Korean Reinsurance Company, Lloyd’s Syndicate 1414 – Ascot and Lloyd’s Syndicate 2791 – MAP.
As our sister publication Artemis reports, the proportion supported by capital markets is likely to be higher in practice, as many participating traditional reinsurers are expected to return some of their insurance business to third-party capital vehicles or ILS structures.
Tim Cerio, President/CEO and Executive Director of Citizens, commented: “It appears that the maximum possible loss insured by our Citizens policies is indeed at an all-time low. This is good news, thanks to reforms and our small PIF (policy in force) numbers.”
Citizens Chief Financial Officer Jennifer Montero added: “There is ample capacity in both the catastrophe bond market and the traditional reinsurance market due to increased capital, improved earnings and restored confidence in the Florida market.”
