Amlin statement on the completion of Tramline Re cat bond

by Artemis on December 23, 2011

Amlin Plc have issued a press statement on the completion of their $150m U.S. hurricane, U.S. earthquake, and European windstorm catastrophe bond, Tramline Re Ltd. The deal completed this week and doubled in size from its initial $75m offering. This is Amlin’s first cat bond and is issued under a program which could see them return regularly to the cat bond market.

The full press release from Amlin follows below:

Amlin transfers US hurricane, US earthquake and European windstorm risks to the capital markets

Amlin plc announces that it has acquired coverage for US hurricane, US earthquake and European windstorm perils of up to US$150 million from a Bermudian special purpose insurer, Tramline Re Limited, which in turn is placing a catastrophe bond for this amount into the capital markets.

The transaction provides the Amlin Group with fully collateralised protection over a 3 year period from 1 January 2012 against cumulative modelled insurance and reinsurance claims of in excess of US$630 million in a single year from US Hurricanes and US Earthquakes (defined as gross insurance and gross reinsurance claims) and/or European Windstorms (defined as gross reinsurance and net insurance claims), where such modelled claims per event are in excess of US$75 million.

This cover is in addition to the protection that Amlin purchases through the traditional reinsurance marketplace and provides significant tail risk protection for the Group. The cover provided by the bond is based on market share factors applied to market industry losses as reported by PCS for the US and PERILS for Europe.

As part of the transaction Amlin AG has entered into a risk transfer contract with Tramline Re Limited which will issue to investors $150 million of three year principal-at-risk variable rate notes. The proceeds of these notes will comprise the collateral for Tramline Re Limited’s obligations to Amlin AG pursuant to the risk transfer contract. Amlin’s Lloyd’s Syndicate 2001 and Amlin Corporate Insurance will also benefit from the cover provided by the bond through arrangements between them and Amlin AG.

The transaction has been structured and arranged by Aon Benfield Securities with risk modelling provided by AIR Worldwide.

Charles Philipps, chief executive of Amlin plc, said: “The protection afforded under this bond will complement our traditional reinsurance programme and protect the Group from frequency of major catastrophe losses allowing us to consolidate our position in improving market conditions.”

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