The recently completed Golden State Re Ltd. catastrophe bond, designed to provide the California State Compensation Insurance Fund (SCIF) with a source of reinsurance cover for workers compensation claims resulting from major earthquakes, has been hailed as groundbreaking by many. The linkage this deal provides between earthquake losses and the resulting workers compensation claims is innovative and shows that cat bonds are not just for covering property and infrastructure damage.
The Golden State Re cat bond completed last week and now two of the deals participants have published press releases on their roles in the transaction.
Willis Capital Markets & Advisory (WCMA), the capital markets specialist division of global insurance broker Willis are the first to have published a press release about this transaction. They acted as sole structuring agent and bookrunner for the transaction. With their structuring and placement assistance the cat bond secured $200m of multi-year, fully collateralized cover for workers compensation claims resulting from qualifying earthquakes. Coverage is on a per-occurrence basis and the Golden State Re cat bond structure uses a modelled loss trigger which WCMA say will provide the SCIF with a relatively fast pay-out after a qualifying event.
Tony Ursano, CEO, Willis Capital Markets & Advisory said; “Our involvement in the transaction reinforces our view that there is substantial investor demand, even for minimum rate-on-line deals. We expect investors to continue to welcome well structured deals bringing them new risks and new sponsors, and we are fully equipped to sole structure and place such transactions.”
Chadbourne & Parke LLP, an international law firm, represented the California State Compensation Insurance Fund during the transaction and have published a press release here. They helped the SCIF by arranging the Golden State Re vehicle as a program under which further cat bonds can be issued in future should they choose, they also assisted with the issuance of this first tranche of Series 2011-1 Class A notes as a Rule 144A offering to qualified institutional investors.
Chadbourne professionals involved in this transaction were insurance and reinsurance practice partners John Sarchio and Carey Child, corporate partner Dan Rabinowitz and insurance and reinsurance special counsel Richard Liskov.
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