GC Securities has completed the placement of the series 2013-1 notes—with notional principal at $200,000,000—through a new catastrophe bond shelf programme.
MetroCat Re will benefit First Mutual Transportation Assurance Company (FMTAC)—a New York licensed and domiciled captive insurer and subsidiary of the Metropolitan Transportation Authority (MTA).
FMTAC and MTA will use the cat bond market to manage its storm surge risks in the New York metropolitan region. MetroCat Re will be the first ever cat bond to protect solely against this type of risk.
The bond provides three years of per occurrence determined storm surge height protection as measured by up to five calculation locations in the region during the event period of a named storm.
Thomas Prendergast, chairman and CEO of MTA, explained that in the aftermath of Superstorm Sandy, avenues of obtaining insurance and reinsurance “contracted dramatically”.
“We anticipate that this deal represents the start of a long-term alternative reinsurance option that diversifies MTA’s risk management strategy,” added Prendergast.
Jerry Harley, managing director of Marsh, said: “We worked with the MTA to find an innovative approach to manage its catastrophe risk going forward.”
“By working with our sister company Guy Carpenter, we were able to provide a capital market-based solution that gives the MTA the flexibility to spread risk over a long-term solution and introduce new sources of reinsurance capacity to replace post-storm market capacity reductions.”
