Cover is the broadest protection of a reinsurance account yet seen in the cat bond market, says Hvidsten
Willis Capital Markets has acted as Co-Lead Manager of an offering of $150m of notes by Newton Re Limited.
The notes, which have been issued by Newton Re Limited off its existing unlimited shelf program, collateralise a reinsurance agreement with Catlin Insurance Company Limited, Bermuda and the Catlin Syndicate at Lloyd’s (Syndicate 2003).
The transaction provides Catlin with indemnity based reinsurance protection in respect of losses arising on its property treaty catastrophe excess of loss account, property risk excess of loss account and proportional reinsurance account.
Covered perils are windstorms and earthquakes in the USA, windstorms in Europe and typhoons and earthquakes in Japan. Cover is provided on an annual aggregate basis over a three year period.
The notes, which were rated BB by Standard & Poor's and bb by AM Best, have a coupon of Libor +750 basis points. The notes mature on January 7, 2011. Lehman Brothers acted as sole initial purchaser and Bookrunner for the notes.
Mark Hvidsten, CEO, Willis Capital Markets, said, "We are delighted to have worked with Catlin to develop a highly innovative transaction providing multi-year aggregate excess of loss protection of a reinsurance account.
"This is a complex risk that can be more efficiently absorbed in the catastrophe bond market than by traditional reinsurance capital. Careful and sophisticated structuring has resulted in a transaction that enables investors to support the deal, while providing Catlin with economic and rating agency capital efficiencies.
"The cover is perhaps the broadest protection of a reinsurance account yet seen in the catastrophe bond market.”
Joe Plumeri, chairman and CEO, Willis Group commented. “Willis is excited to have been instrumental in executing this ground-breaking deal. Our business is about helping our clients optimise their capital efficiency. This transaction demonstrates our ability to deliver innovative capital markets based solutions that achieve these objectives.”