Turkish cat pool completes $100m cat bond
The Turkish Catastrophe Insurance Pool (TCIP) has completed a $100 million cat bond aimed at providing protection against earthquakes in Istanbul.
This is the second time that TCIP has utilised the capital markets to obtain earthquake protection on a parametric basis.
TCIP, managed by Eureko Sigorta, first accessed the cat bond market in 2013 via the issuance of Bosphorus 1 Re and has now sourced $500 million in total of catastrophe bond capacity from capital market investors.
The three year cat bond, Bosphorus, will provide per occurrence protection for earthquakes affecting the Istanbul region and are 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.
RMS conduced risk analysis for the cat bond and GC Securities served as the sole book runner on the transaction.
Süha Çele, executive board member of Eureko Sigorta AS, said: “After the positive outcome of the Bosphorus 1 Re transaction in 2013, TCIP and RMS collaborated once again to create a new index, using ground motion observations across an expanded network of 73 strong-motion seismometers.
Remzi Duman, reinsurance director responsible for reinsurance affairs of Eureko Sigorta AS, added: “The transparent trigger mechanics were understood and accepted by investors, and strong demand made this a highly successful transaction.”
Ben Brookes, vice president of capital markets at RMS, said: “The successful Bosphorus deal shows that investors are keen to take on diversifying perils when the risks are adequately understood through robust modelling.
“RMS’ experience with deals such as MetroCat Re and Bosphorus 1 Re helps public bodies such as TCIP transfer catastrophe risk to the capital markets through intelligently structured, insurance-linked securities.”
