Swiss Re Insurance-Linked Fund Management

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Blackstone indemnity cat bond an ILS market milestone: Monnier, Swiss Re


The just completed first indemnity catastrophe bond sponsored by asset management giant Blackstone is a new milestone for the insurance-linked securities (ILS) market, Swiss Re’s Jean-Louis Monnier has said, as it broadens what the cat bond can do for asset managers seeking peak catastrophe peril protection.

jean-louis-monnier-swiss-reSwiss Re Capital Markets announced today that it has successfully structured and placed the issuance of US $250 million of insurance-linked securities issued to provide protection to certain real estate funds managed or controlled by affiliates of Blackstone Inc.

As we reported yesterday, the new Wrigley Re Ltd. (Series 2023-1) cat bond transaction was completed yesterday, marking the completion of Blackstone’s first cat bond that will provide it protection on an indemnity trigger basis.

Previously the asset manager had sponsored the $50 million Wrigley Re Ltd. (Series 2021-1) cat bond deal, that provided Blackstone with protection against losses from California earthquakes on a parametric trigger basis, across a roughly a three-year term to the end of June 2024.

But this new Wrigley Re 2023-1 cat bond transaction is Blackstone’s first indemnity catastrophe bond, which Monnier noted is a landmark deal for the cat bond and ILS market.

Monnier, Head of ILS at Swiss Re, commented, “Swiss Re Capital Markets is proud to have set a milestone with the structuring of Blackstone’s first indemnity issuance.

“This transaction is the result of a collaboration between Blackstone and ILS investors to develop a new solution that fits the challenges of an asset manager and expands the boundaries of the ILS market.

“It is a milestone in the ILS market’s path to realize its potential as an efficient provider of peak peril capacity.”

In fact, Swiss Re notes that there are two other milestones with Blackstone’s first indemnity trigger cat bond.

This is the first corporate catastrophe bond that covers named storm risks on an indemnity basis, and also the first corporate catastrophe bond that provides its protection across multiple countries.

Blackstone receives coverage for both named storms and earthquakes risks in the United States and Canada, with the new issuance.

Finally, another innovative feature of the Wrigley Re 2023-1 catastrophe bond transaction is the fact this deal introduces a risk-based premium adjustment mechanism, that allows for adjustments to account for changes in risk in the covered real estate portfolio.

All of these features could be extremely valuable to both corporate cat bond sponsors and any asset managers looking to sponsor cat bonds, as they provide added flexibility for such a transaction.

As we said in our report on this cat bond yesterday, Blackstone is one of the most sophisticated asset managers when it comes to insurance and risk management, but the structural innovations seen in its latest cat bond deal are applicable to many types of corporate cat bond sponsor, as well as to asset managers wanting to carve out protection against peak perils their portfolios may hold exposure to.

You can read all about this  Wrigley Re Ltd. (Series 2023-1)  catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.

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