August 26th, 2015

GC Securities* Completes Catastrophe Bond Bosphorus Ltd. Series 2015-1 Notes Benefiting the Turkish Catastrophe Insurance Pool

Posted at 6:45 AM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of the Series 2015-1 Notes, with notional principal of USD 100,000,000, through the newly formed catastrophe bond shelf program, Bosphorus Ltd., to benefit the Turkish Catastrophe Insurance Pool (TCIP). The 2015-1 Notes represent the second time that TCIP has utilized the capital markets to obtain earthquake protection on a parametric basis. TCIP, managed by Eureko Sigorta A.Ş., first accessed the cat bond market in 2013 via the issuance of Bosphorus 1 Re Ltd. and has now sourced USD 500 million in total of catastrophe bond capacity from capital market investors.

The Series 2015-1 Notes provide three years of per occurrence protection for earthquakes affecting the Istanbul region and are triggered based on certain ground motion measurements captured at certain ground motion seismometers that are part of the Istanbul Early Warning and Rapid Response System operated by Boğaziçi University Kandilli Observatory and Earthquake Research Institute (KOERI) with logistical support from the Istanbul Governorate, Istanbul Metropolitan Municipality and First Army Headquarters.

GC Securities served as the sole bookrunner on the transaction. Risk Management Solutions, Inc. served as expertizing modeling firm and calculation agent.

Risk Profile

Series 2015-1 Notes Size Rating Expected Maturity Coupon
Class A Notes $100,000,000 Unrated July 17, 2018 IBRD Note Interest Rate + 3.25%

 

Süha Çele, Executive Board Member of Eureko Sigorta A.Ş., stated, “We are proud to be the sponsor of Bosphorus Ltd. Our previous bond, Bosphorus 1 Re, was a real success story as it is the first cat bond covering Turkish perils. We are pleased to see that the second bond is also well accepted by the capital markets, which is showing us also that the bond program of TCIP is now well established. In view of the constantly growing portfolio of TCIP, our cooperation with the capital markets will continue in the near future, which would allow TCIP to diversify its reinsurance buying and utilize multi-year capacity at a stable price.”

Remzi Duman, Reinsurance Director responsible for reinsurance affairs of Eureko Sigorta A.Ş., noted, “The transparent trigger mechanics were understood and accepted by investors, and strong demand made this a highly successful transaction. Bosphorus 1 Re was the first deal from an untapped market, Turkey, and we are happy to sustain our appetite in the ILS market through Bosphorus Ltd.”

David Priebe, Vice Chairman of Guy Carpenter, stated, “The successful execution of Bosphorus Ltd. on behalf of TCIP continues to cement GC Securities’ position as the global market leader for capital markets-based insurance risk transfer solutions for public, governmental and quasi-governmental entities. Marsh & McLennan’s continued commitment to bringing alternative capital solutions for the benefit of our global clients highlights the breadth of the GC Securities platform and continues to allow for Guy Carpenter’s global client base to access alternative capital-based risk transfer solutions.”

Cory Anger, Global Head of ILS Structuring, GC Securities, noted, “We are delighted that TCIP has elected to utilize catastrophe bond-based protection for a second time to complement its traditional reinsurance program and build upon the success of its initial use of catastrophe bonds. After the successful issuance of USD 100 million of the Series 2015-1 Notes, TCIP has now transferred in total USD 500 million of earthquake risk affecting the Istanbul region to the catastrophe bond market. For the Series 2015-1 Notes, TCIP enhanced the initial parametric trigger structure by incorporating three new ground motion seismometers within the parametric index given the continued growth and success of TCIP. The use of an unsubordinated, unsecured note issued by the International Bank for Reconstruction and Development as the collateral solution balances giving investors superior investment yield and diversifying the type of collateral solution that are most common in catastrophe bond transactions while maintaining high investment quality for TCIP. Finally, the use of a derivative (instead of reinsurance) between Bosphorus Ltd. and TCIP allows for speedy recoveries by TCIP once the parametric index value is determined.”

Chi Hum, Global Head of ILS Distribution, GC Securities, stated, “The capital markets have continued to forge a symbiotic relationship with TCIP and this has been demonstrated by the overwhelming investor support given the oversubscription of orders seen during the book building process for the Bosphorus Ltd. transaction and the broad base of investor participation with more than 20 investors. The investor base was attracted to the diversifying exposure that the Series 2015-1 Notes provide, in addition to a formulated and transparent parametric trigger. GC Securities is honored to have been instrumental in placing the Series 2015-1 Notes with investors on behalf of TCIP.” 

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*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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