Understanding Catastrophe Bonds and Insurance-Linked Securities with Rick Pagnani

Published Date: September 3, 2026

Author: HANetf

As investors look beyond traditional asset classes for diversification and income opportunities, catastrophe bonds are gaining attention as a unique form of insurance-linked investment. Rick Pagnani, Co-Founder, Lead Portfolio Manager and CEO of King Ridge Capital, discusses how catastrophe bonds work, the role they can play in portfolios, and how active management, scientific analysis and risk assessment help identify opportunities in the reinsurance market.

Key Topics:

King Ridge Capital’s approach to insurance-linked securities
The firm’s focus on managing catastrophe bond portfolios and its role in launching ETFs in the US, UK and Europe.
Building resilient portfolios through catastrophe bonds
How King Ridge seeks to create portfolios designed to withstand individual events while balancing risk and return.
The role of actuarial science in assessing catastrophe risk
How meteorological, engineering and scientific expertise is used to analyse risks and price catastrophe bonds.
Portfolio construction, diversification and risk management
Managing exposure across different perils and regions, maintaining liquidity, and evaluating each bond’s contribution to overall portfolio risk.
The outlook for catastrophe bonds and the reinsurance market in 2026
Recent spread movements, yield opportunities compared with high yield markets, and the continued attractiveness of the catastrophe bond opportunity set.

Transcript:

King Ridge has been formed to manage portfolios in the insurance link security space. We are actively managing the world’s first ETF in the United States with Brookmont, and now we are we’ve launched with Han ETF here in the UK and Europe. Well, what we are focused on is creating portfolios that are resilient to single events. It’s absolutely critical. We want to manage our liquidity, absolutely critical, and then we look to maximize our risk-adjusted return for our investors. Those are our three guiding principles. We’ve had a couple of great years. The industry’s had good years of performance, and with that, you’ve seen some additional capital come in. We we have seen spreads compress somewhat. That said, they started to fan out again this past January, we’re super encouraged by the market and the opportunity set. It’s absolutely critical. There is a great deal of actuarial rigor that goes on and is involved in underwriting catastrophe bonds. It’s a great deal of science. Our team is comprised of two PhDs, one in meteorology, one in engineering, and that is absolutely essential for understanding the nuance of cap bonds and being able to price the risk and making sure our investors are being adequately compensated for the risk they’re bearing. So we look at spread relative to volatility and the downside. We make sure that we’re getting sufficient spread. We also look at the marginal contribution of that particular bond to the overall portfolio. There’s about 340 bonds in the universe we presently hold in the in the UK. Excuse me, in the USIT, we have about 23 bonds. We’re growing that in the US fund. We’re at 86. We would see that as a steady state. We are constantly culling through the market, trying to find the best bonds that meet our risk-adjusted return objectives, while also satisfying the constraints that we have to manage our liquidity, and those constraints are basically by peril and by region. We only keep a certain percentage of our portfolio in each and every one of those buckets in order to make sure that we have sufficient liquidity. We’re not subject to undue downside, and we maximize the risk-adjusted return. Yeah, we’re we’re bullish on 2026. As I said before, you know spreads have come in, but they’re still wide. The thing that we look at is we look at comparable yields in the high yield space, and we are paying anywhere from 150 to 350 wider. We’re happy with that. We think you know. We think the reinsurance market actually does a very good job pricing risk.

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Understanding Catastrophe Bonds and Insurance-Linked Securities with Rick Pagnani

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