IDB arranges first sovereign parametric catastrophe swap for Belize

Artemis reports that the Inter-American Development Bank has arranged its first sovereign parametric catastrophe swap, for Belize, with Swiss Re carrying the entire underlying exposure. The cover is worth $20 million. It runs from Aug. 1, 2026 through May 31, 2028, which spans the 2026 and 2027 hurricane seasons.

Payouts are capped at $10 million per policy year once pre-agreed parametric triggers are hit. Belize contributed to the premium, with support from the Ready and Resilient Americas Initiative and donor funds from the French Climate Fund.

The swap is the first execution to emerge from the IDB's 2025 pledge to bring catastrophe bonds and swaps to Latin American and Caribbean members. It uses reinsurance only: no capital markets, no syndicate, one carrier. That keeps the structure simple but leaves the risk concentrated with Swiss Re.

Belize already has $25 million in IDB contingent credit. It also holds $118 million in approved loans whose climate-resilient debt clauses defer principal after a qualifying disaster. The swap layers quick parametric cash on top of instruments that buy time. The IDB said the deal shows how countries can transfer disaster risk to international markets and access rapid liquidity after extreme events.

At $20 million, this is a small trade. A development bank has moved sovereign catastrophe risk to a reinsurer without issuing a bond. If the template repeats, the size will grow.