Markets & Investing
Wildfire-Exposed Catastrophe Bond Issuance Tops $5 Billion as Investor Interest Grows
05 Aug 2026
deVere Group CEO Nigel Green says catastrophe bonds carrying wildfire exposure are moving beyond their insurance origins and into mainstream investment portfolios.
4 August 2026 — Wildfire catastrophe bonds are developing into a new asset class as investors seek returns that are less closely linked to traditional equity and credit markets, according to Nigel Green, CEO of deVere Group.
His comments follow a sharp rise in catastrophe bond issuance carrying wildfire exposure. According to specialist data provider Artemis, issuance has already exceeded $5 billion in 2026, putting the market on course to challenge the record set last year.
The wider catastrophe bond market now has approximately $61 billion outstanding, following a 45% increase in new issuance during 2025.
“Most investors still think of catastrophe bonds as something insurers deal with, not something that belongs in a serious portfolio,” Green said. “This thinking is already out of date.”
He said global wildfire losses are increasing by roughly 12% annually, faster than almost any other category of natural catastrophe. Standalone wildfire bonds, previously considered too specialised to trade independently, are becoming investable instruments in their own right.
A Different Source of Portfolio Risk
Green said the appeal of catastrophe bonds lies in their potential to provide genuine diversification.
Unlike conventional assets, these instruments are not primarily affected by central bank decisions, company earnings or movements in stock markets. Their performance depends on whether a wildfire occurs within the specific parameters defined by the bond.
“A wildfire either happens within the defined parameters of the bond or it doesn’t,” he said. “This is a completely different risk driver to almost everything else sitting in a typical portfolio, and it’s exactly what makes it valuable.”
Green believes this independence can make wildfire bonds attractive to investors seeking returns that are not closely correlated with equities and traditional fixed income.
Better Risk Models Support Market Growth
Improving wildfire risk models are also helping to drive issuance.
Investors were previously cautious because available models did not provide enough confidence to price wildfire exposure accurately. Green said advances in data, forecasting and risk assessment are now allowing sophisticated investors to allocate capital with greater confidence.
“Firms building these risk models have improved their data and their forecasting to the point where sophisticated investors are now comfortable putting real capital behind the numbers,” he said.
Los Angeles Fires Changed the Market
The Los Angeles fires of January 2025 became a major turning point for insurers and investors. The fires destroyed more than 16,000 buildings and caused an estimated $40 billion in insured losses.
“This event was a wake-up call for the entire industry,” Green said.
He noted that the California FAIR Plan’s exposure in Los Angeles County increased by more than 50% in one year as traditional insurers reduced their exposure.
According to Green, capital markets are increasingly stepping into areas where private insurance capacity is under pressure. Investors willing to accept clearly defined catastrophe risk are being compensated for providing additional capital.
Europe Could Be the Next Growth Market
Green expects Europe to become the next major market for wildfire catastrophe bonds, although issuance remains less developed than in the United States.
“Europe is the fastest-warming continent on Earth and wildfire risk there is only heading in one direction,” he said.
He believes capital will enter the European market as wildfire modelling develops to the standard required by institutional investors.
“The market hasn’t caught up yet, but it will have to,” Green added. “Once European wildfire modelling matures to the standard investors expect, capital will follow, the same way it did in California.”
Climate Risk Becomes Investable
Green urged investors to look beyond the unfamiliar structure of catastrophe bonds and focus on the role they could play in a diversified portfolio.
“During a sharp equity sell-off, a well-structured wildfire bond doesn’t care what the S&P is doing,” he said. “This kind of independence is rare and valuable.”
He concluded that the growth of wildfire catastrophe bonds reflects a broader change in investor thinking.
“Climate risk used to be treated purely as a cost to manage,” Green said. “It’s now becoming an asset class that a growing number of investors can actively allocate towards.”
About deVere Group
deVere Group is an independent adviser providing specialist global financial solutions to international, mass-affluent and high-net-worth clients. The organisation has a global network of offices, more than 80,000 clients and approximately $14 billion under advisement.
