Globe Re Ltd. – Full details:
The Globe Re Ltd. catastrophe bond transaction was a unique issuance in the market as it featured both an equity tranche as well as an issuance of catastrophe-linked notes.
Hannover Re was the ceding company and sponsor of this arrangement, but on behalf of its clients risks rather than its own.
The property catastrophe risks of a number of Hannover Re’s US cedants were pooled and transferred to the capital market in several tranches.
A Bermuda-based special purpose entity named Globe Re Ltd. was established for this transaction.
Globe Re Ltd. was capitalised to US $133 million, with that funded through the issue of an equity tranche of US $33 million and a further US $100 million in cat bonds bonds split into three tranches, with various rating categories.
The term of the transaction was one year and Hannover Re retained a 15.2% of the equity tranche.
The three tranches were broken down as follows:
- $45 Million Class A
- $40 Million Class B
- $15 Million Class C
Uniquely, the Class A notes received an investment grade ‘BBB-‘ rating from S&P, the Class B notes were rated ‘BB’ and the Class C ‘B’.