Ten insurance-linked securities now listed on the exchange

A record number of catastrophe bonds have been listed on the Bermuda Stock Exchange (BSX) so far in 2010, pushing the total value of listed bonds above $1bn for the first time.

The exchange, which has recently benefited from new Bermuda Monetary Authority regulations that make it easier to create and list insurance-linked securities (ILS), is also expecting more companies to turn to the BSX to list their cat bonds later in the year.

So far, the BSX has 10 cat bonds listed with a combined value of $1.174bn. Three of these have been listed since the end of 2009 – State Farm’s Merna Re II ($350m), Flagstone Reinsurance Holdings’ Montana Re transaction ($175m) and Chartis’s Lodestone Re ($425m).

“We would like Bermuda to become the platform of choice for listing of cat bonds,” said BSX president and CEO Greg Wojciechowski. “It makes sense, the sponsors are here, the special purpose insurers are set up here and the Exchange is here.”

Wojciechowski added that the publicity following this year’s listings had raised the profile of the jurisdiction and the exchange.

Strong demand from investors and sponsors has led to $2.4 billion of new capacity issuance globally so far in 2010, and nearly a third of this capacity listed on the BSX through Mena Re II and Lodestone Re.

The collapse of Lehman Brothers had an impact on the collateral structures of four catastrophe bonds. Collateral structures provide additional security for bonds. Investors are now looking for open and transparent structures and Wojciechowski believes that listing on an exchange can provide this security in the ILS asset class. It could also lead to new institutional investors, such as pensions, investing in cat bonds, he added.