U.S. insurance group Travelers is bringing their third catastrophe bond to market through a newly established program called Long Point Re III Ltd. according to sources in the ILS market. Travelers are continuing the Longpoint Re naming tradition of their two earlier transactions, Longpoint Re Ltd. and Longpoint Re II Ltd. The latest cat bond to come to market in 2012, Long Point Re III Ltd. is again seeking to transfer certain U.S. hurricane risks to investors in advance of the U.S. hurricane season which officially begins in June.
Long Point Re III Ltd. will provide protection for a number of Travelers companies and subsidiaries we’re told and this cat bond aims to provide the sponsors with three years of protection for certain U.S. hurricane risks on a per-occurrence basis using an indemnity trigger. We’re told that cover from Long Point Re III will be for hurricanes in U.S. northeastern and eastern states only, so the deal will offer some diversification to investors who may be exposed in other areas such as Florida and the Gulf coast states.
The deal is being marketed as a single tranche cat bond with a preliminary size of $150m, we’ll have to wait and see how much appetite investors have left for U.S. hurricane risks and whether this deal upsizes, but the fact it only covers northeastern and eastern Atlantic coast states should ensure a certain level of popularity.
Long Point Re III uses an indemnity trigger and we’re told that the attachment point is being set at $2 billion. This differs to their last deal, Longpoint Re II (which is still in effect), which used a PCS based industry loss trigger although it too covered northeast and east coast U.S. states.
As with every recent cat bond deal AIR Worldwide are providing risk modelling services.
That’s all the information we have on this transaction at the moment. Longpoint Re III Ltd. has been added to our Deal Directory and we’ll update you as and when further details come to light.
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