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GC Securities highlights innovations in Pool Re terror cat bond issuance


The recently completed £75 million Baltic PCC Limited (Series 2019) terrorism catastrophe bond, which was sponsored by Pool Re, the UK government-backed mutual terrorism reinsurance facility, achieved a number of innovative firsts.

guy-carpenter-logoGC Securities, the capital markets and insurance-linked securities (ILS) focused unit of reinsurance broker Guy Carpenter, acted as sole structurer and placement agent for what is now the first cat bond to transfer standalone terrorism risk to the ILS market.

The company highlights that, as well as being the first standalone terror cat bond, the Baltic PCC transaction achieved a number of innovative firsts.

GC Securities explained, “The cat bond provides multi-year, indemnity retrocession protection for terrorism risk in the UK and breaks new ground on multiple fronts.”

As we said, it’s the first to transfer terror risks to the ILS market on a standalone basis. But it’s also the very first UK sterling denominated cat bond and the first cat bond issuance to leverage Computational Fluid Dynamic modelling for the risk analysis required.

It’s also the first UK domiciled protected cell company to issue a catastrophe bond, the only previous UK cat bond having been issued using a PLC company structure (reinsurance firm SCOR’s Atlas Capital UK 2018 PLC (Series 2018 ISPV 1) transaction).

Des Potter, Managing Director, GC Securities commented, “It was a privilege to work with the Pool Re team on their inaugural and innovative cat bond transaction, which was well supported by a globally diverse panel of sophisticated ILS market investors.”

Shiv Kumar, President, GC Securities, also said, “Executing this successful placement whilst the ILS market is processing losses from 2017 and 2018 demonstrates the strength and quality of Pool Re’s proposition and their market-leading risk analysis. This type of innovation is a great example of the major role the UK market can play in broadening the ILS asset class.”

The catastrophe bond was completed recently and its issuance was well-received, resulting in the transaction being oversubscribed by investors. The cat bond sits within Pool Re’s retrocessional reinsurance tower.

You can read all about this first standalone terrorism cat bond Baltic PCC Limited (Series 2019) and every other catastrophe bond transaction since the market began in our Deal Directory. It has also been included into all of our cat bond market charts and statistics.

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