The Jardine Lloyd Thompson Capital Markets (JLTCM) insurance-linked securities (ILS) structuring and issuance team has successfully placed a second weather risk exposed catastrophe bond for sponsor Allianz Risk Transfer, in a $14.5 million Market Re Ltd. (Series 2017-2) transaction.
This is the second private catastrophe bond to cover temperature related weather risks for sponsor Allianz Risk Transfer, following on from a $30.75 million Market Re Ltd. (Series 2016-5) transaction issued in 2016.
JLTCM said that this latest transaction from its Market Re Ltd. private cat bond platform, which it has termed Market Re 2017-2 (Weather), saw $14.5 million of notes issued and sold to ILS investors, in order to fully collateralize an underlying retrocessional reinsurance agreement.
This Market Re 2017-2 transaction will provide the sponsor, which we understand to be Allianz Risk Transfer (ART), with a single-year source of collateralized retrocession to cover it against certain losses caused by warmer than anticipated winters across Europe.
The trigger for this Market Re 2017-2 weather cat bond is a parametric index based on temperature measurements at weather stations across specific regions in Europe, we understand.
Hence the coverage will mirror weather derivative style protections that Allianz ART may have sold or perhaps fronted for others, such as weather risk specialist ILS fund manager Nephila Capital.
Allianz ART works closely with ILS manager Nephila, collaborating on weather risk transfer deals and other catastrophe exposures, so there is a good chance that some of the risk being transferred through this Market re 2017-2 cat bond are related to risk retained by Allianz ART under that partnership.
Ed Hochberg, CEO of JLT Re NA and JLTCM, on the completion of this transaction, “We are pleased to continue to service our clients with novel risk transfer solutions. We are focused on continuing to develop products in this space as global ILS investors expand their underwriting capabilities.”
“We are thrilled to see the cedent return to sponsor another weather-indexed bond via the Market Re platform,” added Michael Popkin, Managing Director and Co-Head of Insurance-Linked Securities at JLTCM.
Market Re has proven to be an efficient vehicle for bespoke and complex risk transfer which cedents and investors alike have grown accustomed to”, added Rick Miller, Managing Director and Co-Head of Insurance-Linked Securities at JLTCM.
This is only the third cat bond to cover temperature related weather risks in the 20 year history of the market, making it an innovative and novel return for Allianz ART and the JLTCM team.
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