Twelve Capital issues unique cat bond
Twelve Capital, the Zurich-based independent investment manager, has issued another cat bond using a unique structure whereby three different events must occur before it is triggered.
Dodeka III is a $10 million zero-coupon one-year cat bond that covers multi-peril risk in the US. In order for the bond to be triggered, at least three independent events have to reach a predefined loss level.
“The cost-efficiency of our technology is allowing for a wide size range of transactions, including small ones, such as the currently issued bond which corresponds to the investment-capacity required by our investment vehicles,” said Dr. Roman Muraviev, director, modelling analysis and portfolio management, at Twelve Capital.
“Furthermore, this bond offers a unique risk-profile to our clients as there are no other publicly traded bonds that require at least three events to trigger.”
Similar to the previous Dodeka transactions, this bond is an Industry Loss Warranty with the underlying risk transfer mechanism being a derivative-swap rather than a reinsurance contract.
Twelve Capital said the bond is expected to achieve attractive returns, exceeding the average return of a public cat bond, in the event that there is no trigger event.
