Cincinnati Insurance completes $100 million cat bond

The Cincinnati Insurance Company, one of the biggest 25 insurance companies in the US, has completed a $100 million cat bond that transfers the company’s risks associated with earthquakes on a per-occurrence basis, as well as severe convective storm losses on an aggregate basis.

Skyline Re 2014-1 is a three-year deal that was arranged by Jardine Lloyd Thompson Capital Markets (JLTCM). The advisors said it closed at $100 million and at the tight end of revised price guidance.

“This second Skyline transaction clearly shows the value for cedants to begin to engage with the capital markets and develop relationships with these new business partners, said Michael Popkin, managing director and co-head of Insurance-Linked Securities at JLTCM.

“The collaborative process between cedant and investor in a private catastrophe bond builds relationships between them for the long term. The growth in overall investor support for our private placement bonds clearly demonstrates that these types of cat bonds have become broadly accepted and mainstream.”

Rick Miller, managing director and co-head of Insurance-Linked Securities at JLTCM, added: “Following the recent formation of JLT Towers Re, we were pleased to again collaborate on such an innovative structure with Cincinnati Insurance, a true market leader. The Skyline 2014-1 transaction built upon the success and the same relationships involved in the Skyline 2013-1 transaction. At $100 million, the Skyline 2014-1 bond grew substantially from the $61.2 million 2013 bond. In addition, the transaction expands the coverage territory and provides three-year cover as opposed to the one-year cover in the previous bond. We saw not only strong support from existing investors but also significant interest from new investors.”