A division of Citigroup has been announced today as being the indenture trustee on the recently issued $150m Embarcadero Re Ltd. catastrophe bond which transferred some of the California Earthquake Authority’s (CEA) earthquake risks to the capital markets. Citigroup’s Agency and Trust Services business, acting through Citibank, N.A., will provide trustee services for the tenure of the bond and potentially for any future transactions issued under Embarcadero Re we presume.
The Embarcadero Re cat bond has been hailed as groundbreaking as it enabled the CEA to directly transfer a large amount of earthquake risk to the capital markets using a Bermuda domiciled special purpose insurer at a cost which they said was cheaper than the comparable reinsurance coverage.
Alan Smith, Global Head of Issuer Services for Citi said; “The California Earthquake Authority bond issue is a first-to-market transaction for the Insurance-Linked Securities (ILS) market and Citi is pleased to have been named Indenture Trustee. Citi’s extensive experience in corporate trust enabled us to support the innovative solution for this unique and highly successful transaction that fully addressed the CEA’s needs.”