Riverfront Re catastrophe bond marketed for Great American Insurance

by Artemis on March 12, 2014

A new catastrophe bond transaction named Riverfront Re Ltd. (Series 2014-1) has been launched to the ILS investment market on behalf of first time cat bond sponsor, U.S. property and casualty insurer Great American Insurance Group.

Great American Insurance Group is a subsidiary of financial services firm American Financial Group. This is the insurers first visit to the capital markets to issue a catastrophe bond, adding another first time U.S. primary insurer sponsor to the 2014 tally of issuers.

Riverfront Re Ltd. is a Bermuda domiciled special purpose insurer registered in late-January for the purpose of issuing series of catastrophe bond notes. In this first issuance for Great American Insurance, Riverfront Re Ltd. is proposing the issue of a single $95m Series 2014-1 tranche of notes.

The notes will provide Great American and subsidiaries with a multi-year source of fully-collateralized reinsurance protection against the U.S. perils of named storms, earthquakes including fire following, severe thunderstorms and winter storms. The protection runs for almost three years with maturity of the Riverfront Re bonds due at the end of January 2017.

Ratings agency Standard & Poor’s said that the Riverfront Re cat bond will cover Great American Insurance and its named subsidiaries losses on a per-occurrence basis from an attachment point of $100m up to an exhaustion point of $200m.

Despite the $100m layer of Great American Insurance’s reinsurance program being covered by the Riverfront Re cat bond, S&P lists the tranche of Series 2014-1 notes at $95m in size, which suggests some kind of retained layer of $5m and also doesn’t leave a lot of room for upsizing.

The ultimate cedents, or beneficiaries of the reinsurance protection, will be Great American Insurance Co.; American Empire Surplus Lines Insurance Co.; American Empire Insurance Co.; Mid-Continent Casualty Co.; Mid-Continent Assurance Co.; Mid-Continent Excess and Surplus Insurance Co., Mid-Continent Specialty Insurance Services Inc.; and Oklahoma Surety Co, according to S&P. Great American Insurance will act as agent of the ceding companies and will be responsible for sending and receiving notices of losses and receiving or remitting payments.

Standard & Poor’s has assigned its ‘BB-(sf)’ preliminary rating to Riverfront Re Ltd.’s principal at-risk variable-rate series 2014-1 notes.

That is all the information we have on the Riverfront Re Ltd. (Series 2014-1) catastrophe bond for the moment. The Riverfront Re cat bond has been added to the Artemis Deal Directory and we will update you as more information becomes available and the deal comes to market.

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