Chubb’s latest catastrophe bond transaction in their series of East Lane Re deals has closed and upsized significantly to more than double the amount it was originally marketed at.
The fourth East Lane Re deal, East Lane Re IV replaces some of the cover Chubb had from previous transactions and provides Federal Insurance Co. and other Chubb subsidiaries with a collateralized source of reinsurance cover against losses from hurricanes, earthquakes, severe thunderstorms, and winter storms in certain covered U.S.areas on an indemnified, per-occurrence basis.
East Lane Re IV Ltd., a Cayman Islands SPV, began marketing as a two tranche $200m cat bond deal but at close it succeeded in securing $475m in cover for Chubb. The deal remains in two tranches, with $225m of Class A Series 2011-1 notes which run for three years until March 2014 and $250m of Class B notes which run for four years until March 2015.
The deal priced well below guidance according to sources in the investment sector and there was significant investor demand for the transaction. Chubb have taken advantage of the attractive pricing of cat bonds and abundant investor demand to fully replace the cover that East Lane Re and East Lane Re II afforded them (both of which have tranches maturing this year).
Standard & Poor’s finalised the deals ratings at ‘BB+’ for the $225m Class A tranche and ‘BB’ for the $250m Class B tranche.
Further details on this transaction can be found in our catastrophe bond deal directory and we’ll update you if any more details emerge.