Alterra Capital reports loss from Muteki catastrophe bond

by Artemis on November 2, 2011

Alterra Capital Holdings, the insurance and reinsurance group formed from the merger of Max Capital and Harbour Point, has announced its third quarter 2011 results (which show solid performance in a not particularly easy market). One item in the results press release is particularly of interest to Artemis readers, their reporting of an investment position in the Muteki Ltd. catastrophe bond.

As our readers will be very aware, the Muteki Ltd. catastrophe bond was exposed to the Japanese earthquake in March 2011 and was so badly impacted by the event that Muteki was triggered and became a total loss.

Alterra Capital have disclosed that they had a $25m investment in a cat bond which was exposed to the Japanese earthquake and tsunami, so that can only be the Muteki bond, and lost all of that principal.

It’s a fact that re/insurers do invest in cat bonds as part of their diversified approach to risk and reward and despite cat bonds having been originally devised to protect re/insurers, sometimes they can hurt them too (as also evidenced by PartnerRe’s investment losses in cat bonds).

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