GC Securities has completed the placement of Series 2015-1 Class A Principal At-Risk Variable Rate Notes with notional principal of $50 million through a newly-formed catastrophe bond shelf programme, Panda Re.
The notes have been undertaken to benefit the China Property & Casualty Reinsurance Company and China Reinsurance Corporation (collectively China Re).
This is the first time that China Re has used the catastrophe bond market to manage its natural peril risks and is the first ever bond benefiting a Chinese insurer or reinsurer. Panda Re also represents the first time that catastrophe bond investors have gained exposure to Chinese perils.
While the Series 2015-1 notes are US dollar-denominated with Panda Re’s limit to China Re based on US dollars, they are positioned alongside certain layers of China Re’s traditional retrocession programme to provide per occurrence protection from earthquakes on an indemnity trigger basis.
GC Securities served as sole structurer and sole placement agent.
Cory Anger, global head of insurance-linked securities structuring at GC Securities, commented: “The protection response of the Series 2015-1 notes was designed to minimise foreign exchange risk by determining the percentage of Panda Re’s limit response in Renminbi while acknowledging and balancing that best execution of the bond limit from capital markets investors is currently in US dollar denomination.”
“In recognition as the first Chinese earthquake catastrophe bond, China Re took advantage of many latest features for indemnity-triggered catastrophe bonds but also balanced its need for every bell and whistle in order to maximise investor response.”
