Guy Carp offers multi-territory, multi-event cat bond

Guy Carpenter & Company, Ltd and MMC Securities Ltd. announced the completion of a multi-territory, multi-event catastrophe bond transaction.
The bond will pay Brit Insurance Holdings PLC principal subsidiary, Brit Insurance Limited, up to US$200 million [approximately Cdn$214 million] in the event of a series of pre-defined severe natural catastrophes.
Events covered by the transaction include US hurricanes (Florida, Gulf states and East Coast), California earthquakes, New Madrid (US Midwest) earthquakes, UK and European windstorms, Japanese typhoons and Japanese earthquakes.
“This is the second transaction of what will be a continuing and growing form of new capacity for the reinsurance market,” said Geoff Bromley, Guy Carpenter’s chairman of European and Asian operations.
“This transaction shows how market-leading companies, like Brit Insurance, continue to seek more sophisticated and cost-effcient asset liability management solutions.”
The bond will be the industry’s second publicly rated collaterized debt obligation of natural catastrophe risk, a Guy Carp statement said.
The senior tranche of the transaction was Aa1 rated by Moody’s and AAA rated by Fitch, and will offer the diversification and potential yield benefits of natural catastrophe exposure to low-risk/low-volatility investors such as pension funds and life insurers.