American International Group (AIG) is on the market with $125 million of five-year catastrophe bonds providing reinsurance against named storms and earthquakes in the U.S., according to a Standard and Poor's presale report.
The deal, Tradewynd Re, is the third cat-bond on the market this week, following a $150 million offering from Renaissance Re and a $75 million deal from Munich Re.
Tradewynd covers named storms in all 50 U.S. states with the exception of Alaska and the District of Columbia, as well as for the Gulf of Mexico and the Caribbean. The covered area for earthquakes that are reported by the U.S. Geological Survey is all 50 U.S. states, the District of Columbia, and Canada.
Aon Benfield Securities and BNP Paribas are joint-bookrunners with GC Securities joining the former as joint structuring agent. Expected closing is June 9, 2013.
The notes have an interest rate of the U.S. money market fund yield plus 825 basis points.
S&P assigned a preliminary 'B+' rating to the notes.
S&P also noted in the report that the bond includes a broad trigger, meaning that events occurring outside the covered area can trigger the bond if they cause damage within the covered area.