Louisiana Citizens completes $100m cat bond
The Louisiana Citizens Property Insurance Corporation has closed a $100 million catastrophe bond hedging its exposure to tropical cyclone risks.
This is the third time Louisiana Citizens has utilised the cat bond market to manage its tropical cyclone risks.
The notes were placed through a newly-formed Bermuda domiciled catastrophe bond shelf programme Pelican III Re.
The notes are positioned alongside Louisiana Citizens’ traditional reinsurance programme to provide per occurrence protection from tropical cyclone-related losses.
They replace Louisiana Citizens’ maturing catastrophe bond protection by “providing three years of risk transfer protection at 56 percent price reduction and improved structural features, including broader definition of Named Storms, addition of a liquidity feature to advance the next 30 days’ worth of expected claims payments and increased flexibility with respect to the annual reset option”.
GC Securities was the sole structurer and sole bookrunner.
Steve Cottrell, chief financial officer of Louisiana Citizens, said: “Louisiana Citizens Property Insurance Corporation was very pleased with the investor demand for our catastrophe bond, Pelican III Re. Catastrophe bonds are an important part of our total reinsurance strategy.”
David Priebe, vice chairman of Guy Carpenter, added: “This transaction exemplifies the benefit of the convergence between the reinsurance and capital markets and demonstrates the value that Louisiana Citizens achieved in utilising the catastrophe bond market to meet its risk transfer needs. GC Securities is honoured to have assisted LA Citizens in the offering of the Series 2015-1 notes.”
