Jamaica To Get $150 million Catastrophe Bond Full Payout After Category 5 Hurricane Melissa

Investors in Jamaica’s $150 million catastrophe bond are now facing a full trigger event, which would require payment of the bond’s entire value to assist the island in dealing with the devastation caused by Hurricane Melissa — the most powerful storm ever to make landfall in Jamaica’s recorded history.

According to Florian Steiger, Chief Executive Officer of Icosa Investments AG, a Swiss firm specializing in alternative fixed-income strategies, the data indicates that the storm’s parameters have crossed the thresholds required for a full payout.

“We expect the cat bond to pay out in full or at least close to it,” Steiger told Bloomberg on Tuesday.

How Jamaica’s Catastrophe Bond Works

The catastrophe bond — arranged by the World Bank — serves as a financial safeguard against rare, high-impact natural disasters. It was designed to release funds only under extreme conditions, using parametric triggers such as wind speed, barometric pressure, and storm trajectory. Once these metrics meet specific thresholds, the payout mechanism is automatically activated.

A spokesperson for the World Bank confirmed that the institution is closely monitoring the storm’s intensity and location.

“Jamaica’s catastrophe bond includes parametric triggers based on storm characteristics such as central pressure and path,” the spokesperson said. “We will provide updates as more data becomes available.”

Ricardo Makyn/Agence France-Presse — Getty Images

Hurricane Melissa’s Unprecedented Strength

As of Tuesday morning, Hurricane Melissa’s sustained winds reached 185 miles per hour (298 kilometers per hour) — up from 180 mph earlier in the day — solidifying its status as a Category 5 storm, the highest classification on the Saffir-Simpson scale.

Meteorologists describe Melissa as compact yet extraordinarily intense. The storm made landfall on Jamaica’s western coast, producing catastrophic damage across St. James, Hanover, and Westmoreland parishes. Analysts warn that even though Melissa’s path spared the most densely populated areas of Kingston and Portmore, the national toll remains staggering.

Economic Impact and Early Loss Estimates

Early projections suggested potential losses of up to $16 billion, but updated modeling by Chuck Watson of Enki Research now estimates total damages around $6.5 billion — comparable to the destruction wrought by Hurricane Gilbert in 1988.

“Melissa ranks among the most intense Atlantic hurricanes ever observed. Jamaica faces extreme impacts in the next few hours,” Icosa said in a LinkedIn post. “The human toll and physical damage will be severe, with recovery efforts requiring significant international support over the coming months and years.”

A full payout of Jamaica’s catastrophe bond would inject crucial emergency funds into national recovery efforts, providing immediate relief for communities left devastated by the storm’s passage.