The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has confirmed it has worked with the World Bank to structure a catastrophe bond that would transfer some of its risks into the capital markets.
Full details of the deal are yet to emerge but it is believed to be worth $30 million and will transfer hurricane and earthquake risks impacting its 16 member island nations.
The World Bank has a dedicated bond issuance platform called the Global Debt Issuance Facility and it looks likely that this platform has been used for this deal.
Still reeling from the effects of Hurricane Sandy, the Caribbean region has taken a number of steps in recent years to become increasingly proactive with its disaster management – this cat bond seems to be the latest move to allow it to cope with large catastrophe losses.
In an interview with Intelligent Insurer last year, Isaac Anthony, chief executive of CCRIF, said cat exposure has increased in the region and must be handled better if risks are to be reduced. One of the options for CCRIF was the use of capital markets instruments.
“CCRIF has been monitoring opportunities in the capital market and has utilised a capital market instrument for a portion of the reinsurance capacity every year so far,” said Anthony. “We will continue to monitor it and see convergence in pricing which will make ILS more attractive both to the core earthquake and tropical cyclone products and new products which are currently being developed.”
CCRIF has also been working for several years now to develop an excess rainfall product which will address the losses associated with heavy rainfall and will be available to all Caribbean countries. The product is being developed in partnership with global reinsurer Swiss Re.
Sixteen governments are currently members of CCRIF: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Trinidad & Tobago and the Turks & Caicos Islands.
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Carribbean, CCRIF, World Bank, Cat Bond, Isaac Anthony