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Gator Re cat bond notes extended again, $17.78m of principal remains


Just a brief update on the stricken catastrophe bond Gator Re Ltd., the fate of which has yet to be fully resolved as just under $17.78 million of principal remains outstanding and the notes have been extended for another month into July.

The latest loss estimate, which we first reported in April, showed that qualifying claims from severe thunderstorms events covered by the Gator Re cat bond had risen to just over $213.6 million, which as the attachment point was $175 million means that the extended and retained $35 million of the collateral principal was likely to be fully paid out to the sponsor American Strategic Insurance.

The sponsor had reported that it was making a $29.5 million reinsurance recovery under the Gator Re cat bond, but with the loss estimates having risen beyond the retained level of principal it is expected that the $35 million would be fully paid out.

It then became clear that some of the principal had been paid, as the outstanding was reduced to $17.775,360 million of note principal at the last monthly extension.

That principal remains outstanding, suggesting that American Strategic has yet to be able to get its hands on the rest of the reinsurance capital from the Gator Re cat bond transaction.

The notes are fully marked down on broker pricing sheets and the markets we’ve spoken with expect that the full remaining principal will be paid out, given where the loss estimates had risen to.

But it is possible that someone could be contesting that, causing the need for further extension, although we cannot confirm this. It’s perhaps more likely this is just part of the process, which does highlight the length of time that can be required for an indemnity trigger catastrophe bond to pay out, versus a parametric or index trigger (both of which can be quicker).

The $17.775,360 million of Gator Re catastrophe bond notes have now been extended to 9th July 2017

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