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Only scratching surface with respect to cat bonds: World Bank Treasurer

When it comes to the use of catastrophe bonds in disaster risk financing, so far we’re only “scratching the surface”, in terms of what can be done using the cat bond structure, according to Jorge Familiar, Vice President and Treasurer of the World Bank.

Jorge Familiar has worked at the World Bank for over 16 years, in a variety of financial related roles, becoming Vice President and Treasurer, as well as Pension Finance Administrator of the World Bank Group, at the beginning of 2022.

As the executive in charge of the World Bank’s capital markets operations and bond issuances, including those issued by IBRD and IDA, Familiar is a key figure in the hierarchy of the organisation when it comes to catastrophe bonds, ultimately sitting at the top of the group that arranges and facilitates World Bank cat bond deals.

In a recent interview with CNBC, on the news channels Squawk Box Asia, Familiar was asked for his thoughts about catastrophe bonds and their relevance in Asia.

While he explained that cat bond market issuance conditions are not at their best, due to broader movements in markets around the world, Familiar is particularly bullish on the future for catastrophe bonds.

Familiar said, “I certainly think that there is a long way to go, in terms of continuing to develop this market and Asia clearly could be an area of focus.

“But this is something valuable for the whole world. I mean, if you think about about it from a development point of view, 26 million people fall into poverty because of natural disasters. So having the tools to manage risks is something extremely important.”

Moving on to talk about conditions right now for cat bond issuance, Familiar explained, “In the short run, you know, the situation in markets is not necessarily good for new issuance.”

However, the World Bank Treasurer added that he expects market conditions will improve.

Saying, “But at some point the conditions will be there for the market to resume and I’m sure that we’re just scratching the surface in terms of what can be done with respect to cat bonds.”

Familiar is the latest in a string of senior World Bank leaders to make positive comments related to catastrophe bonds, underscoring the Bank’s continued commitment to the structure and intention to help its clients issue more of them as a way to source capital to cover disaster risks.

As we explained last week, recently the World Bank’s senior leadership has been relatively quiet about the use of cat bonds as a key disaster risk financing and risk transfer option for its sovereign client-base, so it’s encouraging to see another key voice from the Bank speaking positively about the cat bond structure.

Familiar’s comments are perhaps even more positive, as it suggests the World Bank sees opportunities to expand its activities in the catastrophe bond space, if opportunities allow and the structure’s flexibility can be leveraged to meet the needs of its client-base.

Artemis also reported earlier today that after undergoing a calculation process following typhoon Noru, the Philippines government’s World Bank facilitated catastrophe bond is not facing a loss of principal due to the storm’s winds.

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