GC Securities completes first ever cat bond for TWIA

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer has announced the placement of the Series 2014-1 Notes, with notional principal at $400,000,000, through a newly formed catastrophe bond shelf program, Alamo Re Ltd.

The bonds will benefit the Texas Windstorm Insurance Association (TWIA); it is the first time that the TWIA has utilized the cat bond market to manage its tropical cyclone risks.

The Series 2014-1 bonds are positioned alongside the TWIA’s traditional reinsurance program to provide annual aggregate protection from tropical storms causing at least $50 million loss to the TWIA.

GC Securities serves as sole structurer and sole bookrunner. Hannover Rück SE serves as the transformer reinsurer facilitating TWIA’s access to catastrophe bond-based risk transfer capacity.

John Polak, general manager of the Texas Windstorm Insurance Association, says: “TWIA appreciates the assistance of GC Securities and Hannover Re in successfully placing our first catastrophe bond. This transaction is another step forward towards our overall funding goals and demonstrates our ongoing commitment to provide financial security to our Texas policyholders.”

David Priebe, vice chairman of Guy Carpenter, adds: “This transaction exemplifies the benefit of the convergence between the insurance, reinsurance and capital markets and demonstrates the value that TWIA achieved in partnering GC Securities, Guy Carpenter’s broking team and Hannover Re to deliver a solution best meeting TWIA’s risk transfer needs. Having pioneered the application of catastrophe bonds for residual market insurers, the successful execution of Alamo Re demonstrates our commitment, expertise and industry leading position in providing capital markets-based risk transfer solutions to residual market insurers and other public entity clients.”