The U.S. Federal Emergency Management Agency has secured $300 million of flood reinsurance for three years for the National Flood Insurance Program through the issuance of its second catastrophe bond, FloodSmart Re Ltd. (Series 2019-1), the agency said Thursday.

“FEMA continues to re-engage reinsurance markets to help strengthen the financial framework of the NFIP and promote private sector participation in flood risk management,” said David I. Maurstad, deputy associate administrator of the Federal Insurance and Mitigation Administration and chief executive of the NFIP, speaking on a call Thursday afternoon.

This most recent Floodsmart bond joins its bigger brother from last August and a traditional reinsurance placement in January that brings the NFIP’s total reinsurance program to $2.12 billion, Maurstad said. “This placement builds on the first transfer of NFIP flood risk in August 2018” and the agency’s January traditional placement, he said.

“Since this past fall, FEMA has been working to secure an additional reinsurance placement for the NFIP through a transaction that for the second time engages the capital markets,” Mr. Maurstad said.

On Tuesday, FEMA entered into a three-year reinsurance agreement, effective Wednesday, with Hannover Re (Ireland) Designated Activity Company, he said.

The agreement is structured to cover, for a given flood event from a named storm, 2.5% of losses between $6 billion and $8 billion, and 12.5% of losses between $8 billion and $10 billion, he said, with FEMA paying $32 million in premium for the first year of reinsurance coverage from the bond.

“By engaging both the traditional reinsurance markets and the capital markets, the NFIP can reduce risk transfer costs, access additional market capacity and further diversify its risk transfer partners,” Mr. Maurstad said.

While this will be the final reinsurance placement of 2019, “FEMA is committed to further developing and maturing the NFIP Reinsurance Program in a manner that helps strengthen the financial framework of the NFIP, and expands the role of the private markets in managing U.S. flood risk,” Mr. Maurstad said.