XL Catlin taps cat bond shelf programme Galileo Re for first time

XL Catlin has completed a $300 million catastrophe bond protecting itself against a mixture of windstorm and earthquake risk in the US, Canada and Europe. It is the first time the company has used this form of protection since XL Group acquired Catlin.

The bond was issued through existing catastrophe bond shelf programme Galileo Re, which is based in Bermuda. The bond will directly protect XL Insurance (Bermuda) and certain of its insurance and reinsurance affiliates and related entities (XL Catlin). GC Securities was the sole structuring agent and sole bookrunner on the deal.

The notes provide annual aggregate protection from named storms affecting the US, earthquakes affecting Canada and the US, and Europe windstorms affecting select European countries using a weighted industry loss index using industry losses as reported by Property Claim Services and PERILS AG.

The Series 2016-1 Class A Notes have the third highest annual expected loss (9.52 percent) and the third highest annual attachment probability (13.98 percent), each based on the AIR’s sensitivity catalog for named storms, relative to all outstanding 144A P&C catastrophe bonds. The Class B and Class C Notes have one year expected losses (based on sensitivity catalog for Named Storms) of 4.96 percent and 3.09 percent respectively.

Cory Anger, global head of ILS Structuring, GC Securities, said: “We are honored to have facilitated XL Catlin’s first 144A catastrophe bond transaction through the existing Galileo Re cat bond facility that was originally established by a Catlin affiliated entity in order to provide additional risk transfer capacity at attractive pricing, streamlined transaction costs and expedited execution timeframe.

“The transparent weighted industry loss trigger structure and thoughtful tranching of the overall risk layer best facilitated investors’ appetite for all classes within the Series 2016-1 Notes to maximize overall investor interest that could participate depending upon their fund’s requirements. XL Catlin also incorporated new flexibility into the transaction structure with respect to annual resets allowing XL Catlin to react to future market conditions while maintaining the cohesiveness and applicability of the Galileo Re protection.”

Chi Hum, global Head of ILS Distribution, GC Securities, added: "The strong market support for each Class within the Galileo Re Ltd. Series 2016-1 Notes provides yet another example of the expanding relevance and competitiveness of capital markets capacity including for higher risk profile placements. Execution was also aided by XL Catlin’s reputation and track-record as an intelligent utilizer of non-rated capital sources throughout its risk transfer programme.”