Turkish cat pool’s Bosphorus 1 Re completes

Bosphorus 1 Re, a newly formed catastrophe bond shelf program that will provide protection to the Turkish Catastrophe Insurance Pool (TCIP), has placed its first tranche in the form of a $400 million cat bond.

GC Securities, a division of MMC Securities Corp, served as sole bookrunner, co-structurer and co-lead manager on the bond which represents the first time that the TCIP has directly utilised the cat bond market to manage its earthquake risks in the Istanbul region.

The bond provides three years of per occurrence earthquake protection to earthquakes affecting the Istanbul region.

It is triggered based on certain ground motion measurements captured at certain ground motion seismometers that are part of the Istanbul Early Warning and Rapid Response System operated by Boğaziçi University Kandilli Observatory and Earthquake Research Institute (KOERI).

“TCIP was pleased with the capital markets’ receptivity to a Turkey earthquake cat bond issuance,” said Suha Cele, executive vice president, Eureko Sigorta, with responsibility for reinsurance affairs of TCIP.

“As TCIP continues to grow due to recent legislation changes, diversifying the source of our risk transfer capacity at a competitive price is necessary. Additionally, the parametric trigger can allow TCIP to receive payment quickly in order to bolster our claims paying capacity.”

Cory Anger, global head of ILS Structuring, GC Securities, added: “This transaction highlights the acceptability and flexibility of capital markets-based risk transfer capacity to accept and strongly support bespoke trigger solutions (including for relatively new regions / perils for the capital markets) to meet the specific needs of cedents – in this case, TCIP.

“The parametric trigger structure was tailored to correlate with TCIP’s exposures and estimated losses from earthquakes affecting the Istanbul region. The transaction flexibly allows TCIP to annually update the triggering formula to reflect changes to TCIP’s exposures and expand the coverage within the Istanbul region.”