Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

AIG sponsored $2.375 billion insurance-linked securities since 2010


The completion on December 18th of the latest catastrophe bond from insurer AIG, Tradewynd Re Ltd. (Series 2013-2), takes the total amount of insurance-linked securities (ILS) sponsored by the insurer since 2010 to $2.375 billion.

AIG commented yesterday on the completion of its latest catastrophe bond transaction. It said that it has entered into multiple reinsurance agreements with Tradewynd Re Ltd., which will provide it with $400 million of indemnity reinsurance protection against U.S., Caribbean and Gulf of Mexico named storms, and U.S. and Canadian earthquakes.

One of AIG’s aims with the Tradewynd Re cat bonds has been to include a diverse portfolio of risk within a cat bond transaction, which it has succeeded to encourage the ILS investor community to support. AIG said that its latest deal, like Tradewynd Re Ltd. (Series 2013-1) did earlier this year, includes a diversified portfolio of commercial and consumer risks.

Three tranches of notes were issued in the latest transaction, one with a one-year term and two with three-year terms. AIG said that strong investor demand and favorable pricing in the ILS market helped it to increase the offering to $400 million from the initial $100 million it was launched at.

AIG considers itself a leader in the ILS market, having sponsored more than $525m of indemnity cat bonds in 2013 and $2.375 billion in total since its first cat bond deal in 2010.

AIG’s catastrophe bond deals are listed below:

– May 2010, Lodestone Re Ltd. (Series 2010-1), $425m.

– Dec 2010, Lodestone Re Ltd. (Series 2010-2), $450m.

– Nov 2011, Compass Re Ltd. (Series 2011-1), $575m.

– Dec 2012, Compass Re Ltd. (Series 2012-1), $400m.

– Jul 2013, Tradewynd Re Ltd. (Series 2013-1), $125m.

– Dec 2013, Tradewynd Re Ltd. (Series 2013-2), $400m.

The completion of AIG’s latest Tradewynd Re catastrophe bond took 2013 cat bond issuance past $7 billion, while the market hit $20 billion for first time.

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