GC Securities has placed the Series 2015-1 Notes, with notional principal of $275 million, through the newly formed catastrophe bond shelf programme PennUnion Re.
The new cat bond will benefit Passenger Railroad Insurance, a Bermuda-domiciled captive and a wholly-owned subsidiary of the National Railroad Passenger Corporation, Amtrak.
The notes represent the first time Amtrak has obtained capital markets-based reinsurance for storm surge and wind from named storms and earthquake protection.
They provide per occurrence, parametric triggered protection from storm surge and wind resulting from named storms as well as earthquakes affecting the northeast region of the US for a period of approximately 3.17 years.
The transaction is triggered based on key intensity measurements of the physical parameters for each respective peril captured at specific measurement location.
Storm surge water height measurements are captured at seven tidal gauge stations in the Long Island Sound, East Rive, Lower New York Bay and Delaware River.
Wind measurements are captured and interpolated for 60 ZIP codes along Amtrak’s Northeast corridor railways from Washington DC to near Providence. Earthquake intensity is interpolated to 21 ZIP codes within the states of Delaware, New Jersey, New York, Pennsylvania and Rhode Island.
Gerald Sokol, CFO of National Railroad Passenger Corporation, commented: “This is the first time Amtrak has used the capital markets to broaden our base of insurance coverage. The catastrophe bond market provides us with a means to diversify our sources of insurance in a cost effective manner.”
Chi Hum, global head of insurance-linked securities distribution at GC Securities, added: “We are pleased at the overwhelming support and oversubscribed offering from the more than 25 participating capital market investors on the PennUnion Re Series 2015-1 Notes.”
“This strong support allowed the transaction size to be increased by 37.5 percent from the initial offering size while at the same time pricing at the lowest end of price guidance. Capital markets investors continue to offer support to new entrants into the catastrophe bond space, including, not only for diversifying perils but also for unique triggers structures and sponsor types.”
