8 July 2016ILS

Swiss Re places $100m cat bond for UPC

Broker-dealer Swiss Re Capital Markets has structured and placed the issuance of $100 million of insurance-linked securities (ILS) by Laetere Re on behalf of United Property & Casualty Insurance Company, Family Security Insurance Company and Interboro Insurance Company, known collectively as UPC.

This transaction is UPC's debut catastrophe bond and covers named storms and earthquakes affecting certain coastal states of the US.

Swiss Re Capital Markets underwrote the transaction via three classes of principal at-risk variable rate notes.

The notes were issued by Laetere Re, a Bermuda exempted company registered as a special purpose insurer under the Bermuda Insurance Act 1978 and related regulations, each as amended.

Each of the $30 million Class A notes, the $40 million Class B notes and the $30 million Class C notes has a one-year risk period starting June 1, 2016 and was structured as a discount note.

The reinsurance agreements provide UPC with cascading per occurrence indemnity protection against named storms and earthquakes affecting certain states of the US.

Jean-Louis Monnier, co-head of ILS at Swiss Re Capital Markets, said: "We are pleased to provide support to UPC on its debut catastrophe bond issuance.

“Laetere Re is notable for its efficient structure – the first catastrophe bond sold at a discount pursuant to Rule 144A since 2009 – and the incorporation of a cascading per occurrence indemnity trigger.

“We hope that this transaction is the first of many catastrophe bonds for UPC as it seeks to build a long-term relationship with ILS investors and expand its reinsurance panel via this diversifying source of capital."