USAA is marketing a $70 million catastrophe bond, according to a presale report from Standard & Poor’s.
Goldman Sachs and Swiss Re Capital Markets are the joint structuring agents and joint bookrunners.
The bonds, which are being offered via the 144a market, will transfer the risk of catastrophic damage from U.S. tropical cyclone/hurricane, earthquake (fire following), severe thunderstorm, winter storm, and wildfire exposure between Dec. 3, 2013 and Nov. 30, 2017. USAA may withhold interest and principal payments to cover 7.63% of losses between the attachment point of $2.076 billion and the exhaustion point of $2.993 billion.
The transaction could extend the maturity date by up to 24 months beyond the scheduled redemption date to allow for loss development and reporting; however, it will not extend the risk period.
S&P has assigned a preliminary BB- rating to the securities.
This is USAA’s 21st catastrophe bond, according to S&P. To date, no bonds have resulted in losses, and all have performed as expected.