Frontline Re creates debut cat bond

09-07-2018

Frontline Re has created a $350 million catastrophe bond using insurance-linked securities that were structured and placed by Swiss Re Capital Markets.

Frontline Re is a Bermuda exempted company licensed and registered as a special purpose insurer under the Bermuda Insurance Act 1978 and related regulations. This is Frontline's first catastrophe bond. It covers named storms in Alabama, Florida, North Carolina and South Carolina.

Swiss Re Capital Markets underwrote the transaction via two classes of principal at-risk variable rate. According to Swiss Re the $350 million Frontline Re transaction represents the largest cat bond of a Florida based (non-government entity) insurance company. The $250 million Class A notes and $100 million Class B notes have a four-year risk period starting July 1, 2018 and provide protection against named storms.

The transaction features an event adjusted attachment level, which Swiss Re claims makes it the first time in the cat bond market that a product is based on the event size rank of a named storm within an annual risk period.

“Swiss Re is pleased to provide support to Frontline on its debut catastrophe bond issuance,” said Jean-Louis Monnier, co-head of ILS at Swiss Re Capital Markets, who went on to claim that the transaction was well received by investors, and that it is the largest for a Florida insurer since 2014. “The innovative cat bond combines structural mechanics of the Florida Hurricane Catastrophe Fund as well as features of Frontline's private reinsurance coverage and therefore seamlessly integrates with Frontline's reinsurance program.”

Frontline, bond, Swis Re, ILS, cat, catastrophe, Capital, Markets, insurance-linked, securities, structured, Bermuda

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