Avalon Re Ltd’s notes get upgraded by S&P


A surprising turn of events has struck the seemingly doomed catastrophe bond deal Avalon Re Ltd. After a series of downgrades and extensions by the rating agencies followed by Oil Casualty Insurance buying back as many of the notes as it could the once stricken notes have now received a credit rating upgrade from Standard & Poor’s.

The Class B notes have now been upgraded to ‘BBB+’ from ‘CCC’ by S&P. The reason for the upgrade is that following OCIL’s submittal of a final proof-of-loss claim two of the events (Lake Charles oil refinery spill and the lead paint claims) which risked investors premiums can now be discounted. The remaining event which has any bearing on the notes is the July 2007 steam pipe explosion on Lexington Avenue NY. S&P say that they are now linking the rating on the Class B notes to the rating on Oil Casualty as a premium payer under the reinsurance agreement it holds with Avalon Re Ltd.

So essentially it seems that S&P are saying that despite the possibility of losses still affecting Avalon Re the reinsurance agreement with OCIL and the agreement with Goldman Sachs as swap counterparty and guarantor there of should be sufficient to prevent any major hit to investors on this particular tranche of notes.

new-york-statue-libertyMake sure you register soon to attend our ILS NYC conference, held February 7th 2020 in New York City.

Tickets are selling fast.

Secure your place at the event and get your ticket today!

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.

Read previous post:
Towers Watson encourages investors to diversify into insurance-linked securities

Professional services company Towers Watson has encouraged investors to diversify into reinsurance related investments in a recent publication. The firm...