Guy Carpenter and GC Securities have been named the winner of Insurance Day’s ILS Transaction of the Year, as part of the 2012 World Reinsurance Awards program. This recognition honors the Kibou Ltd. catastrophe bond program for its innovative structure and strategic execution.
Launched in February 2012, Kibou Ltd. is structured for the benefit of ZENKYOREN, National Mutual Insurance Federation of Agricultural Cooperatives (”Zenkyoren”). Hannover Re acted as a transformer reinsurer. As the sole structuring agent, sole lead manager and sole bookrunner on the transaction, GC Securities successfully structured, marketed and executed the first catastrophe bond with exposure to Japan-only earthquake risk since the Tohoku earthquake, and was able to successfully secure the USD300 million of capacity that Zenkyoren desired.
Zenkyoren’s prior catastrophe bond, Muteki Ltd., suffered a full principal loss as a result of the Tohoku earthquake in March 2011. This year’s awards program recognizes Kibou Ltd. as a landmark transaction and the first time that a catastrophe bond sponsor, whose prior transaction had suffered a full loss, successfully renewed its protection with the catastrophe bond’s investor base for the same peril. The innovative structure of the deal, a catalyst for investors to renew capacity, provides Zenkyoren with “top and drop” per occurrence protection from Japan earthquakes using a parametric trigger. This protection is triggered on a per-occurrence basis and is tailored to provide more remote earthquake protection initially. Additionally, if a qualifying earthquake event happens, the protection will adjust with a higher risk profile. In return, investors will receive an increased coupon post-dropdown relative to the initial coupon.
Now in its 19th year, the World Reinsurance Awards honor excellence in the insurance and reinsurance industry. Selected by a distinguished panel of independent judges, the ILS Transaction of the Year award recognizes the successful collaboration of insurance and capital markets solutions through an innovative and bold life or non-life transaction.
David Priebe, Vice Chairman, Guy Carpenter & Company, said, “We are honored to be recognized by Insurance Day amongst our peers and colleagues for innovation in ILS. In the wake of the Tohoku Earthquake, Kibou Ltd. was a unique collaboration between traditional reinsurance and the capital markets to provide effective risk protection and capacity at a time when it was greatly needed.
We are fortunate to have worked with a partner as strategic and experienced in the ILS space as Zenkyoren. Together, we were able to build upon the experience from their prior cat bond transaction and our long-standing track-record in the ILS market, to create a unique program that demonstrates the resiliency of the capital markets as a viable and reliable risk management solution.”
* 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 an offer to buy any security, financial instrument, reinsurance or insurance product. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.