Allianz issues $175m cat bond

The Allianz Group has closed a three-year $175 million cat bond that protects it against named storms and earthquake losses in North America, the Caribbean and Mexico.

Blue Danube II, a special purpose vehicle formed in Bermuda, was structured on behalf of Allianz Argos 14 GmbH, a wholly-owned subsidiary of Allianz SE.

Swiss Re Capital Markets and GC Securities were the structuring agents and bookrunners on the deal.

“Cat bonds represent a key element of our protection landscape. The Blue Danube II Series 2013-1 issuance allows Allianz to lock in a competitive price over a period of three years for protection against natural catastrophes. Thus, we can benefit from the attractive conditions which result from the strong demand for cat bonds in the capital markets,” said Amer Ahmed, CEO of Allianz Re, the reinsurance division of Allianz SE, which is responsible for structuring the transaction for the Allianz Group.

Jean-Louis Monnier, director and head of ILS Europe at Swiss Re Capital Markets, said: “We are very pleased to continue to support Allianz SE's access to capital markets capacity. This new transaction uses a ‘MITT’ trigger and complements last year's Blue Danube issuance, providing Allianz SE with a multi-year cover against named storm and earthquake losses in North America, the Caribbean and Mexico."

A modelled industry trigger transaction developed by Swiss Re Capital Markets, takes industry loss estimates for the US and Canada and weighs them post-event based on certain applicable modelled portfolios. The transaction utilises a putable note, issued by the International Bank of Reconstruction and Development and underwritten by Swiss Re Capital Markets, as collateral.

This is the second time that Allianz has accessed PCS-MITT triggered cat bond protection and the eighth overall cat bond issuance benefitting Allianz since 2007.

Cory Anger, global head of ILS Structuring, GC Securities, said: “Allianz’s experience as a repeat cat bond sponsor allowed it to take advantage of market conditions with respect to garnering favorable terms/conditions, pricing and capacity. For example, expanding the protection to a named storm basis for the US, Mexico and the Caribbean region was an important structural consideration for Allianz in the Series 2013-1 Notes. Investors have shown a willingness to embrace structural flexibility when given proper rationale.”