It’s official, the $1.5 billion Everglades Re Ltd. (Series 2014-1) catastrophe bond has completed today and is now the largest catastrophe bond transaction issued in the markets history.
The third catastrophe bond issuance under the Everglades Re Ltd. shelf programme, this deal saw Florida’s Citizens Property Insurance Corporation massively increase its reliance on the capital markets as a source of reinsurance capital. The successful issuance of the largest ever catastrophe bond, as well as the competitive pricing, helped Citizens to grow its overall reinsurance protection by 68%, while actually spending a little less than in 2013.
The Everglades Re 2014-1 cat bond transaction was settled today. The $1.5 billion of Series 2014-1 Class A principal at risk notes issued by Everglades Re Ltd. have been admitted for listing on the Bermuda Stock Exchange today.
The completion of this transaction is a groundbreaking moment for the cat bond market. Having sponsors like Citizens in the catastrophe bond market is of benefit to all. They raise the cat bond and ILS market’s profile, they bring significant new risk to investors and they even bring new investors into the fold.
It’s not just the size of the transaction that matters, although a $1.5 billion boost to first half issuance could see 2014 on its way to a record for the year, it is the fact that this transaction has received so much mainstream press and will have significantly raised the cat bond market profile among other potential new sponsors and investors.
As sponsors like Florida Citizens become increasingly committed to using the capital markets within their reinsurance arrangements we can expect others to take note and seek to follow suit. One day we might see multiple cat bonds of $1 billion+ issued each year, there are enough large reinsurance programs out there which could tap the ILS market if they wanted to.
Q1 2014 Catastrophe Bond & ILS Market Report – A Record Quarter
This report reviews the catastrophe bond and insurance-linked securities (ILS) market at the end of the first-quarter of 2014, looking at the new risk capital issued and the composition of the transactions completed during Q1 2014. Download your copy here.