Guy Carpenter advises on publicly rated cat bond

Guy Carpenter & Company, Inc., a global risk and reinsurance specialist, has completed a $US200-million catastrophe bond that represents the industry’s first publicly-rated collateralized debt obligation of natural catastrophe risk.
Guy Carpenter, part of the Marsh & McLennan Companies (NYSE: MMC), advised the Catlin Group Limited (LSE: CGL) on the multi-territory, multi-peril catastrophe bond transaction.
Perils covered by the transaction include U.S. hurricanes (Florida, Gulf states and East Coast), Californian earthquakes, New Madrid (US Midwest) earthquakes, U.K. windstorms, European (excluding U.K.) windstorms, Japanese typhoons and Japanese earthquakes.
ABN AMRO London will be bringing the bond to market. The new bond will offer the diversification and yield benefits of natural catastrophe exposure to low-risk/low-volatility investors such as pension funds and life insurers.
“The bond will provide the Catlin Group with competitively priced and fully collateralized protection against severe natural catastrophes, complementing the protection that it already purchases through the traditional reinsurance marketplace,” Guy Carpenter announced in a press release. “The bond will offer coverage of up to US$200.25 million in the event of a series of severe natural catastrophes on an aggregate basis.”
Standard & Poor’s rated the senior tranche of the transaction an ‘AA.’ The bond is the “first transaction linked to natural risk that has received this rating,” according to Guy Carpenter. “In addition, it will be the first catastrophe bond to use Risk Management Solutions’ new parametric triggers for non-U.S. losses.”
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