12 April 2024News

Charles River Re lists $125m catastrophe bond

Charles River Re has listed a $125 million catastrophe bond on the Bermuda Stock Exchange.

The cat bond offers protection against named storms for business written by Shore One  on its behalf and provides American European with a diversification of risk transfer capacity and access to the capital markets.

The three-year cat bond is a 25% upsize from the initial $100 million placement target.

As part of the transaction, American European is entering into a reinsurance contract with Charles River Re Ltd. which offers protection against named storms for business written by ShoreOne. 

“This catastrophe bond is another milestone in ShoreOne’s history and in its partnership with American European,” said Cameron Rhodes, president and chief operating officer of ShoreOne. “This risk transfer protection will strengthen our ability to jointly address the coverage gap for coastal homeowners and the associated flood risk they face.”

“Our catastrophe bond is an essential part of our reinsurance structure and complements a tower backed by industry-leading reinsurers,” said Nachum Stein, CEO of American European. “We are pleased to have successfully sponsored our first catastrophe bond, and done so in partnership with ShoreOne, our valued partner in the coastal homeowner’s market. We are grateful for the strong investor support for our collective mission.”

The Class A Notes issued by Charles River Re Ltd. priced at a spread of 6.75%, with an initial base expected loss of 1.87% and an indemnity trigger over a three-year term with scheduled maturity on May 10th, 2027.

The cat bond successfully closed on April 11, 2024. GC Securities, a division of MMC Securities LLC, is the sole structuring agent and bookrunner.

“We’re proud to have supported American European and ShoreOne’s inaugural catastrophe bond issuance,” said Liam Martens, Senior Vice President of GC Securities. “We are pleased that investors strongly supported this important protection gap initiative and welcomed an MGU and its carrier partner to the catastrophe bond market for the first time in the market’s history.”

Separately, Palm Re has listed $150 million worth of three-year catastrophe bonds on the BSX. 

This is reported to be a a debut catastrophe bond from P&C insurer Florida Peninsula Insurance Company, which is seeking a capital markets backed source of collateralized Florida named storm reinsurance to cover itself and its subsidiary Edison Insurance Company.

Palm Re was  established in Bermuda to issue series of catastrophe bond notes to benefit Florida Peninsula Insurance and subsidiaries against named storm losses in Florida.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.