GC Securities, a division of MMC Securities LLC, a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of three classes of Series 2016-1 Notes, with an aggregate principal amount of USD 300,000,000 through the existing catastrophe bond shelf program, Galileo Re Ltd., to benefit XL Insurance (Bermuda) Ltd. and certain of its insurance and reinsurance affiliates and related entities (XL Catlin). This is the first time that XL Catlin has utilized the 144A cat bond market since XL Group plc’s (XL) acquisition of Catlin Group Limited (Catlin).
The Series 2016-1 Notes provide annual aggregate protection from Named Storms affecting the United States, earthquakes affecting Canada and the United States, and Europe windstorms affecting select European countries using a weighted industry loss index using industry losses as reported by Property Claim Services and PERILS AG.
The Series 2016-1 Class A Notes have the third highest annual expected loss (9.52 percent) and the third highest annual attachment probability (13.98 percent), each based on the AIR’s sensitivity catalog for Named Storms, relative to all outstanding 144A property/casualty (P&C) catastrophe bonds. The Class B and Class C Notes have one year expected losses (based on sensitivity catalog for Named Storms) of 4.96 percent and 3.09 percent respectively.
GC Securities served as sole structuring agent and sole bookrunner.
Series 2016-1 Notes
Class A Notes
January 8, 2019
TMM earnings + 13.50%
Class B Notes
January 8, 2019
TMM earnings + 9.00%
Class C Notes
January 8, 2019
TMM earnings + 7.00%
Nick Frankland, CEO of Guy Carpenter’s EMEA Operations, noted, “Galileo Re Series 2016-1 Notes demonstrates Guy Carpenter’s and GC Securities’ commitment to providing alternative capital retrocession solutions to the reinsurer community. Alternative capital solutions can be beneficial as the industry goes through organizational changes and consolidation in reaction to the current market environment and impact of competing new capital sources for assuming (re)insurance risk to maintain overall cost-effective capitalization.”
Cory Anger, Global Head of ILS Structuring, GC Securities, stated, “We are honored to have facilitated XL Catlin’s first 144A catastrophe bond transaction through the existing Galileo Re cat bond facility that was originally established by a Catlin affiliated entity in order to provide additional risk transfer capacity at attractive pricing, streamlined transaction costs and expedited execution timeframe. The transparent weighted industry loss trigger structure and thoughtful tranching of the overall risk layer best facilitated investors’ appetite for all classes within the Series 2016-1 Notes to maximize overall investor interest that could participate depending upon their fund’s requirements. XL Catlin also incorporated new flexibility into the transaction structure with respect to annual resets allowing XL Catlin to react to future market conditions while maintaining the cohesiveness and applicability of the Galileo Re protection.”
Chi Hum, Global Head of ILS Distribution, GC Securities, noted, “The strong market support for each Class within the Galileo Re Ltd. Series 2016-1 Notes provides yet another example of the expanding relevance and competitiveness of capital markets capacity including for higher risk profile placements. Execution was also aided by XL Catlin’s reputation and track-record as an intelligent utilizer of non-rated capital sources throughout its risk transfer program.”
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*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. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.