Citizens explores return to ILS

Florida state-backed insurer, Citizens is looking to repeat the success of its first cat bond issued in 2012, with a second bond issuance under Everglades Re this year.

Everglades Re made headlines in 2012 when it became the largest cat bond ever, growing from a $200 million tranche of notes to $750 million by the close of the deal. Significant interest in the bond helped to buoy the insurance-linked securities market in 2012 and it is likely investors will be considering the latest issuance with interest.

Arthur Wightman, partner—insurance leader at PwC in Bermuda, told sister publication Bermuda Re that given the size of last year's transaction, and the anticipated value of this year's deal, this latest issuance will represent an important benchmark for the ILS market.

He also said he anticipates that other state insurance funds will start looking more closely at using catastrophe bonds themselves.

Undoubtedly this is something that is being considered,” he said. “At the SIFMA Insurance and Risk Linked Securities conference in New York, many such funds were discussing how their strategies for this year could be optimised. Risk transfer is about creating the best alignment of hedging risk at the right price. A choice between traditional reinsurance and alternative risk transfer and securitisation gives risk managers the ability to make that call.”