June 2nd, 2015

GC Securities* Completes Catastrophe Bond Alamo Re Ltd. Series 2015-1 Notes for the State of Texas’s Windpool

Posted at 11:30 PM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, announced the placement of the Series 2015-1 Notes, with notional principal of USD 700,000,000, through the existing catastrophe bond shelf program, Alamo Re Ltd., to benefit the Texas Windstorm Insurance Association (TWIA). This is the largest 144A catastrophe bond completed to date in 2015 and the second time that TWIA has utilized the cat bond market to manage its tropical cyclone risks.

The two classes within the Series 2015-1 bonds are positioned alongside TWIA’s traditional reinsurance program to provide annual aggregate protection from tropical storms causing at least USD 50 million in losses to TWIA. The Series 2015-1 Class A Notes provide three years of risk transfer protection while the Series 2015-1 Class B Notes provide four years of risk transfer protection. Additionally, they are positioned below and above, respectively, the Series 2014-1 catastrophe bonds which remain outstanding after being issued in 2014 and provide risk transfer protection for two further hurricane seasons.

The three tranches of catastrophe bonds have been designed to manage the amount of catastrophe bond capacity maturing at any point of time. This mitigates the refinancing risk associated with such capacity upon its maturity. With the combined Series 2014-1 and 2015-1 catastrophe bonds outstanding, TWIA has obtained a total of USD 1.1 billion of catastrophe bond-based protection, which makes it the fourth largest P&C catastrophe bond sponsor based on capacity outstanding as of May 15, 2015.

GC Securities served as sole structurer and sole bookrunner. Hannover Rück SE serves as the transformer reinsurer facilitating TWIA’s access to catastrophe bond-based risk transfer capacity.


Series 2015-1 Notes


Fitch Rating

Expected Maturity


Class A Notes


B+ sf

June 7, 2018

TMM earnings + 5.90%

Class B Notes


BB- sf

June 7, 2019

TMM earnings + 4.60%

John Polak, General Manager, Texas Windstorm Insurance Association, stated, “The use of catastrophe bonds has been instrumental for TWIA to achieve our goal of funding to our 100-year PML. Catastrophe bonds have allowed us to manage the overall costs of our risk transfer program, diversify our counterparties, and manage our counterparty credit risk. We appreciate the coordinated efforts of Guy Carpenter and GC Securities to holistically evaluate all sources of capacity. Our partnership with Guy Carpenter and GC Securities has resulted in a cost-effective program that best combines traditional reinsurance, collateralized reinsurance, and catastrophe bond capacity. We value our stable partnership with Hannover Rück SE to facilitate our access to catastrophe bond capacity.”

Ulrich Wallin, CEO of Hannover Re, noted, “We are delighted that TWIA has used its cat bond program ‘Alamo’ for the second time and has again trusted Hannover Re to help manage their cat bond process in a professional and efficient manner alongside GC Securities. It has been a pleasure for us being part of the successful transaction team.”

David Priebe, Vice Chairman of Guy Carpenter, stated, “The successful execution of the second Alamo Re catastrophe bond demonstrates Guy Carpenter’s and GC Securities’ continued commitment, expertise and industry-leading position in providing capital markets-based risk transfer solutions to residual market insurers and other public entity clients. Alamo Re exemplifies the benefit of the convergence between the reinsurance and capital markets and demonstrates the ongoing value that TWIA received from GC Securities, Guy Carpenter and Hannover Re, all of whom delivered a solution specifically tailored to meet TWIA’s risk transfer needs.”

Cory Anger, Global Head of ILS Structuring, GC Securities, noted, “We are honored to have facilitated TWIA’s second catastrophe bond transaction and cost effectively contributed to bringing TWIA to its stated 1-in-100 year funding goal within its budget. The structure of the Alamo Re shelf program allowed TWIA to access additional catastrophe bond capacity more quickly while incurring lower transaction expenses as a subsequent issuance. Additionally, being mindful of financing risk associated with maturing catastrophe bonds, we designed the interaction of the Series 2014-1 Notes and the Series 2015-1 Notes to not only achieve combined results for TWIA in 2015 but also to manage duration risk to TWIA as each class within the respective series matures. We also designed the three tranches to interact seamlessly with each other. This approach provides flexibility to TWIA depending upon its needs to adjust the layering of such risk transfer capacity relative to the prior year’s results/impact to TWIA’s capital base or TWIA’s changing exposures.”

Chi Hum, Global Head of ILS Distribution, GC Securities, stated, “GC Securities is pleased to have been selected by TWIA to work with the Guy Carpenter broker team to develop investor support for the USD 700 million Alamo Re Ltd. Series 2015-1 cat bond issuance. Recognizing TWIA’s continuing presence in the cat bond market and the goals of optimizing the proper mix of capacity sourcing and pricing of a well-structured reinsurance program, the investors responded with significant interest for the transaction and more broadly, with support for TWIA on a going-forward basis. The successful execution of this cat bond is the direct result of an organized and deliberate effort on the part of TWIA to communicate their story to the investor base. We are pleased to have been a part of this strategy.”

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/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. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. 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. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

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