GC Securities has announced the placement of more Series 2015-1 Notes, this time with notional principal of $700 million through the existing catastrophe bond shelf programme, Alamo Re, to benefit the Texas Windstorm Insurance Association (TWIA).
This is the largest 144A catastrophe bond completed to date in 2015 and the second time that TWIA has used the catastrophe bond market to manage its tropical cyclone risks.
The two classes within the Series 2015-1 bonds are positioned alongside TWIA’s traditional reinsurance programme to provide annual aggregate protection from tropical storms causing at least $50 million in losses to TWIA.
The Series 2015-1 Class A Notes provide three years of risk transfer protection while the Series 2015-1 Class B Notes provide four years of risk transfer protection.
They are positioned below and above, respectively, the Series 2014-1 catastrophe bonds which remain outstanding after being issued in 2014 and provide risk transfer protection for two further hurricane seasons.
The three tranches of catastrophe bonds have been designed to manage the amount of catastrophe bond capacity maturing at any point of time.
According to GC Securities, this mitigates the refinancing risk associated with such capacity upon its maturity.
With the combined Series 2014-1 and 2015-1 catastrophe bonds outstanding, TWIA has obtained a total of $1.1 billion of catastrophe bond-based protection, which makes it the fourth largest property and casualty catastrophe bond sponsor based on capacity outstanding as of 15 May 2015.
GC Securities served as sole structurer and sole bookrunner, while Hannover Rück SE served as the transformer reinsurer facilitating TWIA’s access to catastrophe bond-based risk transfer capacity.
This is the second time in the space of a week that GC Securities has confirmed the placement of Series 2015-1 Notes, having previously places bonds with notional principal of $300 million through a newly formed catastrophe bond shelf programme, Cranberry Re.
