GC Securities today announced the placement of the Series 2014-1 Notes, with notional principal at USD400,000,000, through a newly formed catastrophe bond shelf program, Alamo Re Ltd., to benefit the Texas Windstorm Insurance Association (TWIA). This is the first time that the TWIA has utilized the cat bond market to manage its tropical cyclone risks.
The Series 2014-1 bonds are positioned alongside the TWIA’s traditional reinsurance program to provide annual aggregate protection from tropical storms causing at least USD50 million loss to the TWIA.
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 2014-1 Notes
|Class A Notes|
June 7, 2017
TMM earnings + 6.35%
John Polak, General Manager, Texas Windstorm Insurance Association, said, “TWIA appreciates the assistance of GC Securities and Hannover Re in successfully placing our first catastrophe bond. This transaction is another step forward towards our overall funding goals and demonstrates our ongoing commitment to provide financial security to our Texas policyholders.”
David Priebe, Vice Chairman of Guy Carpenter, noted, “This transaction exemplifies the benefit of the convergence between the insurance, reinsurance and capital markets and demonstrates the value that TWIA achieved in partnering GC Securities, Guy Carpenter’s broking team and Hannover Re to deliver a solution best meeting TWIA’s risk transfer needs. Having pioneered the application of catastrophe bonds for residual market insurers, the successful execution of Alamo Re demonstrates our commitment, expertise and industry leading position in providing capital markets-based risk transfer solutions to residual market insurers and other public entity clients.”
Cory Anger, Global Head of ILS Structuring, GC Securities, said, “We are honored to have facilitated TWIA’s first catastrophe bond transaction and to have utilized such form of risk transfer capacity to achieve significant cost reductions, aid in converting TWIA’s risk transfer programs coverage from per occurrence to annual aggregate coverage for the entire program and allow for increased overall coverage limit (relative to recent years). Capital markets investors have uniquely responded to the needs of the TWIA by providing meaningful and cost-effective annual aggregate capacity while also diversifying and expanding the claims payment capacity of the TWIA. The structural terms of the Alamo Re Series 2014-1 Notes incorporates all the latest features and benefits including a flexible variable reset feature to adjust where the catastrophe bond risk transfer layer will sit within TWIA’s overall claims paying capacity resources.”
Chi Hum, Global Head of ILS Distribution, GC Securities, observed, “The capital market investors have shown again that they will provide broad based support for Alamo Re, a well thought out approach by TWIA to develop a diversified reinsurance program. This approach combines competitive pricing across markets and innovative features that target the strengths of each capacity source. The breadth of investors providing multiyear collateralized capacity is a valuable complement to the rated markets capacity from the reinsurers. The strong execution on the placement of these notes signals to TWIA that investors are ready, willing and able to support continued issuance from this program.”
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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.