QBE’s VenTerra Re Ltd. cat bond grows to $250m, prices down

by Artemis on December 24, 2013

The first catastrophe bond transaction sponsored by Australian insurer QBE Insurance Group, VenTerra Re Ltd. (Series 2013-1), has will further lift the 2013 catastrophe bond issuance total as it has grown by $50m to now offer $250m of notes to investors.

The VenTerra Re cat bond offers insurance-linked securities (ILS) investors some welcome diversification through the inclusion of Australian perils. The deal sees QBE Insurance Group seeking a three-year source of risk transfer via a fully-collateralized reinsurance agreement on a per-occurrence basis for losses from earthquakes in the U.S. and Australia and tropical cyclones in Australia.

The transaction launched with a preliminary size of $200m of notes from a single Series 2013-1 tranche. We understand that the tranche has been increased in size by 25%  due to investor demand to now offer $250m of notes to investors.

At the same time the pricing has settled at the bottom of the price guidance range that the deal launched with. The notes launched with price guidance of 3.75% to 4.5%, but this has fallen to the bottom of the range to settle at 3.75%, down approximately 10% from the middle of the original guidance range.

The VenTerra Re cat bond is interesting for a number of reasons, including the broad coverage it will provide QBE and the tightly defined trigger, which we wrote about last week here. For QBE the cat bond will be a successful first visit to the capital markets through a securitization and it may become a regular feature of its reinsurance program.

The VenTerra Re Ltd. (Series 2013-1) catastrophe bond will close before the end of the year. Full details for this transaction can be found in our catastrophe bond and ILS Deal Directory.

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