GC Securities, a Division of MMC Securities Corp., Completes First Catastrophe Bond To Use Paradex Trigger for U.S. Hurricane, U.S. Earthquake and Japan Typhoon to Benefit Flagstone Re
GC Securities, a provider of investment banking services to the (re)insurance industry and affiliate of Guy Carpenter & Company, LLC, has successfully structured and placed USD210 million of protection through an existing catastrophe bond shelf program, Montana Re Ltd., to benefit Flagstone Re. The Series 2010-1 Notes cover, for the first time, hurricane events in the Cayman Islands as well as U.S. hurricane, U.S. earthquake, Europe windstorm, Japan typhoon and Japan earthquake risks.
Providing protection on an occurrence basis for the Class C and D Notes and on a second and/or subsequent event annual aggregate basis for the Class E Notes, the issuance is the first to use the Paradex trigger for U.S. hurricane, U.S. earthquake and Japan typhoon events. The three-year notes have a scheduled for redemption date of January 8, 2014.
The Montana Re issuance provides Flagstone Re with USD210 million of fully collateralized, multi-year protection for a broad range of natural catastrophes in the United States, Europe and Japan.
GC Securities acted as the sole structuring agent, sole manager and sole bookrunner for the offering. This marks GC Securities’ sixth transaction of 2010, securing over USD1.2 billion of capital markets protection for its clients.
Bill Kennedy, CEO of Global Analytics, Capital Markets, Specialty Practices and Advisory, stated “We are pleased to support Flagstone Re’s risk management objectives with a transaction that is the first to cover Cayman Islands events and benefits from the strategic use of the Paradex Index.”
Chi Hum, Head of Global ILS Distribution, GC Securites, added “While typical ILS transactions are thought to be between 1-2 percent expected loss, this transaction further demonstrates the ability of capital markets investors to support a variety of risk profiles and structures. The Class D Notes, with an expected loss greater than 6.5 percent, were broadly supported with significant interest from the ILS investor base.”
Brent Slade, Chief Marketing Officer, Flagstone Re, continued “We are very pleased with the results and efficiency of this transaction. This marks the third such issuance we have sponsored and is testament to our ability to continually access the capital markets in creative ways and increase our capital flexibility.”
* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.