Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

NeHi Inc.

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NeHi Inc. – At a glance:

  • Issuer: NeHi Inc.
  • Cedent / sponsor: Vesta Fire Insurance Corporation
  • Placement / structuring agent/s: Aon Capital Markets structured and underwrote the deal. The deal has been place through the INEX Insurance Exchange.
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: U.S. hurricane
  • Size: $50m
  • Trigger type: Modelled loss
  • Ratings: Moodys: 'Ba3'
  • Date of issue: Jul 2000
  • Other coverage: Link to external coverage

NeHi Inc. – Full details:

Vesta Fire Insurance Corporation has completed an insurance securitization transaction through the private placement of $50 million catastrophe reinsurance-linked notes and common stock to provide protection against losses related to hurricanes in the Northeast United States and hurricanes and tropical storms in Hawaii.

The structure entails $8.5 million in equity investments and $41.5 million raised from the sale of reinsurance-linked notes to the capital markets. Reinsurance payments are triggered by estimated losses due to hurricane or tropical storms as determined by computer modeling of Vesta Fire’s risk exposure done by Applied Insurance Research. Risks and attachment points will by recalculated each year.

The securities were issued through NeHi, Inc. (“NeHi”), a special purpose vehicle, in a privately placed Rule 144A offering.

The notes issued by NeHi were priced at 410 basis points over LIBOR with an initial maturity of approximately three years. Fitch has rated the notes “BB”, while Moody’s Investor Services has rated the notes “Ba3.

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