Catastrophe bond issuer Long Point Re III has issued a catastrophe bond worth $250 million, according to a release from GC Securities, which structured the deal. The shop was also a joint bookrunner with Swiss Re Capital Markets. BNP Paribas and Aon Benfield Securities acted as co-managers.
Rated ‘BB+(sf)’ from Standard & Poor’s, the transaction is the first in the capital market to provide Travelers protection from using an indemnity-based trigger.
“The protection from Long Point Re III provides northeast U.S. hurricane protection on a per-occurrence basis, based on the actual reported losses from certain Travelers' business units,” said Cory Anger, GC’s global head of insurance-linked securities (ILS) structuring.
Anger cited “strong support” for the bond from ILS investors.
The deal is backed by a three-year fully collateralized reinsurance agreement to Travelers from Long Point Re III against each occurrence of a hurricane hitting any Atlantic states from Virginia northward, in addition to Vermont and Pennsylvania.
The CAT bond has an expected loss of 0.88% and a spread of six hundred basis points over U.S. money market fund.
The ‘BB+’ rating is the lowest of three ratings: the catastrophe risk (BB+), the rating on the assets in the collateral account (AAAm), and the risk that the ceding insurer, Travelers, won’t pay (AA/Stable). The deal closed June 6.