Details have now come to light about the first full catastrophe bond sponsored by Hamilton, the Bermuda based insurance and reinsurance holding company, with a target of securing $150 million of retrocessional reinsurance from the Easton Re Pte. Ltd. transaction.
As we explained a week ago, Hamilton has entered the 144a catastrophe bond market and its first cat bond deal is being issued out of Singapore.
Details of this issuance have now become available and we’re told that Hamilton is looking for a three-year source of U.S. named storm and U.S. earthquake retrocessional reinsurance using its newly incorporated Easton Re Pte. Ltd. special purpose reinsurance vehicle domiciled in Singapore.
Easton Re Pte. will issue a single tranche of Series 2020-1 Class A notes that will be offered and sold to investors, with the proceeds used to collateralize retrocessional reinsurance agreements between the issuance vehicle and a range of Hamilton’s subsidiaries, including its reinsurer Hamilton Re and Lloyd’s managing agent.
Hamilton is targeting at least $150 million of retro protection from the cat bond issuance, with the coverage set to be for losses from U.S. named storms (inc. Puerto Rico, US Virgin Islands, DC) and U.S. earthquakes (inc. DC), across three years, on a state weighted industry loss and per-occurrence trigger basis.
The notes will have an initial expected loss of 1.48% at the base case, we’re told, with the coupon price guidance of the offering set in a range from 4.5% to 5%.
For Hamilton, making use of Singapore as the issuance domicile for its first full catastrophe bond transaction means the company will benefit from the ILS grant scheme, to lower the expense of issuance.
That should make the retrocessional reinsurance protection even more cost-effective for the company and enables Hamilton to bring more third-party capital into its business in a particularly efficient manner.