Nelson Re issues $180 million of catastrophe bonds
Glacier Reinsurance AG (“Glacier Re” or “the Company”), the Switzerland-based reinsurer, today announces that Nelson Re Ltd has issued three bonds totalling $180 million under its $1.5 billion catastrophe bond shelf programme sponsored by Glacier Re.
The Series 2008-1 three year bonds have been subscribed to by international investors and have been rated by Moody’s. The bond offering is structured as follows:
– $67.5 million Class G Series 2008-I Principle-at-Risk Variable Rate Notes – rated B3
– $45.0 million Class H Series 2008-I Principle-at-Risk Variable Rate Notes – rated B3
– $67.5 million Class I Series 2008-I Principle-at-Risk Variable Rate Notes – rated B1
The reinsurance agreement provides Glacier Re and Glacier Insurance AG with fully collateralized excess of loss protection for US hurricane, US earthquake and European windstorm perils. This transaction is unique in that the coverage provided by this issuance will protect Glacier for its actual loss experience net of its expected recoveries from the Nelson Re Series 2007-1 notes – which was based on modelled-loss and modified-index triggers. Between these two transactions, Glacier has accumulated over $250m of excess of loss protection on a modelled and indemnity basis.
Glenn Campbell, Chief Financial Officer of the Glacier Group, said:
“Glacier is again demonstrating its ability to use the financial markets creatively. These bonds provide increased security for our policyholders and investors by strengthening our ability to withstand claims from natural catastrophes. Furthermore, this transaction is a critical component of our strategic planning as it locks in three year reinsurance protection during a period of increased environmental and financial volatility.”
“We are delighted that the shelf programme structure has been proven to give us the financial flexibility we sought at the time of its formation.”
Nelson Re, a Cayman Islands exempted insurance company licensed as a Class B insurer, was formed in June 2007 as the issuer of catastrophe bonds under a $1.5 billion shelf programme when the first issuance of $75 million took place.
Goldman, Sachs & Co. acted as sole financial advisor and placement agent for the transaction.
Michael Eakins, who led the Goldman Sachs transaction team, commented that “investors found the independent expert risk analysis and choice of perils very important in choosing to invest in this transaction, which met with phenomenal demand in the market.”
AIR Worldwide Corporate provided independent third party modelling services.
Glacier Re is part of the Glacier Group.