State Compensation Insurance Fund, California’s largest provider of workers’ compensation insurance, has completed its second cat bond.
The $250 million deal provides the fund with fully collateralised protection for workers’ compensation against California earthquake over a term of slightly over four years and three months.
Willis Capital Markets & Advisory (WCMA) structured and placed the deal.
Using a similar structure to State Fund’s first catastrophe bond transaction in 2011, the renewal transaction features a modelled loss trigger on a per occurrence basis.
The deal upsized from $150 million to $250 million on the back of strong investor demand while settling in at the bottom end of the initial pricing guidance of 2.20 percent to 2.70 percent. It will replace a $200 million transaction as State Fund chose to increase the capacity it sources from the capital markets.
Tony Ursano, chief executive officer of WCMA, said: “The pricing that State Fund was able to obtain on Golden State Re II highlights the rapidly changing dynamics in the ILS landscape over the last three years.
“For a similar layer that was placed in 2011, State Fund was able to obtain 25 percent more capacity while pricing dropped more than 40 percent. We expect investors to continue to welcome well-structured deals as capacity continues to seek ways to access insurance risk.”
State Compensation Insurance Fund, Golden State Re II, Willis Capital Markets & Advisory, North America