Hedge Fund Fermat Sees 20% Surge in Catastrophe Bond Market (1)

Hedge fund Fermat Capital Management expects the market for catastrophe bonds to grow 20% this year, as a product based on disasters gains ground in a world increasingly shaped by extreme weather, population density and inflation.

The market “has reached an inflection point,” John Seo, managing director and co-founder of Fermat, said in an interview.

“The key thing is inflation,” he said, which is making it substantially more expensive in Europe and the US to rebuild property that’s been destroyed by natural catastrophes.

John Seo

Photographer: Joe Buglewicz/Bloomberg

Fermat’s growth prediction means the market for cat bonds, which are typically issued by ...