August 1st, 2018

FEMA Expands Reinsurance Initiative - “FloodSmart Re” the First Cat Bond to Ultimately Benefit a Federal Agency

Posted at 2:00 AM ET

GC Securities* Acts as Sole Structuring Agent and Co-Bookrunner.

The Federal Emergency Management Agency (FEMA) announced its August 1, 2018 reinsurance placement for the National Flood Insurance Program (NFIP). For the first time, FEMA has secured reinsurance ultimately backed by capital markets investors, continuing efforts to better manage the NFIP’s financial risk.

FEMA contracted with Guy Carpenter and GC Securities, a division of MMC Securities LLC, both of which are subsidiaries of Marsh & McLennan Companies, Inc. GC Securities served as sole structuring agent and as co-book runner on the deal.

Cory Anger, Global Head of ILS Origination and Structuring, GC Securities, remarked: “More than 35 capital markets investors provided fully-collateralized protection to FEMA/NFIP on the landmark and first-ever indemnity-triggered catastrophe bond (FloodSmart Re’s USD 500 million Series 2018-1 Notes) exposed to flood risk arising from tropical cyclones for the United States. We are honored to have assisted FEMA/NFIP in building a capital agnostic risk transfer program that now delivers innovative catastrophe bond protection from private capital sources in support of its existing cornerstone reinsurance placements.”

An integrated and coordinated approach to collaboration between the insurance industry, governments and now capital markets investors is recognized as an effective method of creating sustainable risk-transfer mechanisms. Closing the protection gap, defined as the cost of uninsured events, presents growing opportunities for the (re)insurance industry and capital markets investors.

“Expanding insurance and reinsurance through functional private-public-partnerships, as FEMA has effectively done over the past two years, is a key component necessary to improve the resiliency of our communities and help Americans bounce back after catastrophic events,” related Jonathan Clark, Public Sector Practice Head of North America, Guy Carpenter.

Click here to read the announcement by FEMA >>

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, 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 LLC, 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.

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