Why Catastrophe Bonds Yield 12%. Should You Invest?

Why Catastrophe Bonds Yield 12%. Should You Invest?

A new ETF allows individuals to earn income by insuring against natural disasters through investing in catastrophe bonds. We break down the historical returns, risk, fees, and structure of this intriguing investment opportunity.

Topics covered include:

  • What types of natural disasters are increasing
  • How insurance companies use reinsurance and cat bonds to protect against extreme losses
  • Why home insurance premium increases should be lower in 2026
  • How cat bonds are structured and what makes them a unique fixed income security
  • What to consider in deciding to invest in cat bonds.


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Investments Mentioned

Brookmont Catastrophic Bond ETF (ILS)

Stone Ridge High Yield Reinsurance Risk Premium Fund (SHRIX and SHRMX)

Show Notes

Miami Is Entering a State of Unreality by Mario Alejandro Ariza—The Atlantic

Historical Hurricane Tracks—NOAA

LA fires dominated insured losses of $127bn in 2025, says Aon by Eva Xiao and Lee Harris—The Financial Times

2026 Climate and Catastrophe Insight—AON

BERKSHIRE HATHAWAY INC. 2002 ANNUAL REPORT—Berkshire Hathaway

When, Where and How Often Insurers Fail—PACICC

Climate change presses on: Devastating wildfires and intense thunderstorms exacerbate losses for insurers—Munich RE

Reinsurance buyers experience market softening as reinsurers grow capital following strong returns—Guy Carpenter

Catastrophe bond sales hit record as insurers offload climate risks by Lee Harris and Ian Smith—The Financial Times

Swiss Re Global Cat Bond Performance Index returns 11.40% for 2025—Artemis

Catastrophe Bonds by Alexander Braun and Carolyn Kousky—Wharton

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