Hedge fund Fermat predicts that the catastrophe bond market will grow by 20%

Hedge fund Fermat Capital Management expects the catastrophe bond market to grow by 20% this year, as extreme weather, population density, and inflation increasingly impact the globe, making products to manage disaster risk more popular. Fermat Managing Director and co-founder John Seo said in an interview that the market has "reached a turning point." "The main issue is inflation," he said, pointing out how inflation significantly increases the costs of reconstruction in Europe and the United States after natural disasters. Fermat's prediction suggests that by the end of 2025, the catastrophe bond market will reach around $60 billion. These bonds are typically issued by insurance companies hoping to transfer extreme risks to the capital market.