The National Flood Insurance Program plans to tap the capital markets for additional reinsurance capacity sometime around the middle of this year, according to the Federal Emergency Management Agency.

It will be the agency’s first foray into the capital markets, FEMA said Monday in a statement.

“FEMA plans to transfer additional risk by engaging the capital markets for the first time through an insurance-linked securities transaction on or about July 1, 2018,” FEMA said in the statement.

Such a transaction will help diversify the agency’s reinsurance program, it said.

“Adding this new ‘building block’ will enable FEMA to transfer risk through two avenues — the traditional reinsurance markets and the capital markets, using tools such as ILS,” FEMA said in its statement.

FEMA said the Biggert-Waters Flood Insurance Reform Act of 2012 and Homeowner Flood Insurance Affordability Act of 2014 have given it the authority to secure reinsurance from the private reinsurance and capital markets to strengthen the financial framework of the NFIP.

Although the agency has published a public notice of the proposed transaction asking interested parties to contact FEMA by Friday, it also cautioned that the notice is not guarantee of a deal.

“FEMA cannot guarantee that it will complete such an ILS transaction in 2018,” the agency said in its statement. “FEMA will complete any placement only if it is beneficial to the NFIP.”

FEMA first purchased reinsurance in 2017, the statement said, and documents on the agency’s website show a program transferring $1.042 billion of the NFIP’s financial risk to 25 reinsurers through Jan. 1, 2018, utilizing Guy Carpenter & Co. L.L.C., the reinsurance intermediary unit of Marsh & McLennan Cos. Inc., to provide broker services to assist in securing the reinsurance placement.

The website documentation shows that as of April 2, 2018, FEMA had paid over $8.6 billion in losses to policyholders as a result of Hurricane Harvey, and because the agency purchased reinsurance in 2017, it recovered $1.042 billion from its reinsurers.

The 2018 program expanded to $1.46 billion in reinsurance cover via 28 markets, again through Guy Carpenter, with Aon Benfield rendering financial advisory services, according to the FEMA documents.