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Everglades Re Ltd. (Series 2012-1)

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Everglades Re Ltd. (Series 2012-1) – At a glance:

  • Issuer: Everglades Re Ltd. (Series 2012-1)
  • Cedent / sponsor: Citizens Property Insurance
  • Placement / structuring agent/s: Goldman Sachs are structuring agent and bookrunner. Loop Capital Markets LLC are co-manager
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Florida hurricanes
  • Size: $750m
  • Trigger type: Indemnity
  • Ratings: S&P: 'B+'
  • Date of issue: Apr 2012

Everglades Re Ltd. (Series 2012-1) – Full details:

Florida Citizens Property Insurance are seeking to issue a single $200m tranche of notes through Everglades Re Ltd. to provide them with a collateralized source of indemnity cover via an excess of loss reinsurance agreement for some of their coastal account portfolio of risk on a per-occurrence basis.

Everglades Re Ltd. is a Bermuda domiciled special purpose insurer which has been set up to issue catastrophe bonds for Florida Citizens. It has been established as a shelf programme so they can issue future cat bond tranches should they choose.

This transaction will provide cover specifically for both personal and commercial residential properties within Citizens Coastal Account. The coastal account is mostly made up of wind only policies for properties on the Florida coastline.

Losses shall be based on the ultimate net loss of Citizens. The notes will provide cover for losses from an attachment point of $6.35 billion up to an exhaustion point of $7.35 billion. The initial probability of attachment and expected loss for the notes are 2.71% and 2.53% while the initial probability of exhaustion is 2.40%.

Collateral is being handled using a trust account into which the proceeds of the sale of the notes will be entered. The proceeds will then be invested in highly rated Treasury money market funds.

The notes are expected to pay an interest coupon in the range of 16.5% to 18% about Treasury money market fund rates.

Update: Everglades Re Ltd. grew to $750m in size during the marketing phase, becoming the largest single cat bond deal ever. The deal priced at the upper end of the expected range and will pay a coupon to investors of 17.75%.

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