Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Johnston Re Ltd. catastrophe bond to provide North Carolina hurricane cover


Munich Re is placing a new catastrophe bond deal under the newly formed Cayman Islands based SPV Johnston Re Ltd. Johnston Re is being placed on behalf of the two North Carolina based non-profit organisations which have insurance companies as their members, the North Carolina Joint Underwriting Association and the North Carolina Insurance Underwriting Association. Just last year Swiss Re placed the Parkton Re cat bond to provide reinsurance protection to these same associations.

Johnston Re will provide reinsurance protection in North Carolina and the Barrier Islands to the associations. It’s a three year deal which will run until May 2013. The deal can be triggered on a per-occurrence basis measured by the actual loss experience the associations member insurers suffer and as such covered losses are not directly linked to Munich Re’s exposure in NC. Munich Re America Inc. will be responsible for making premium payments due under a retrocessional agreement in place between it and Johnston Re Ltd. Guy Carpenter are assisting with this deal through their GC Securities arm.

Standard & Poor’s have rated the deal as ‘BB-‘. It’s expected that the deal will complete around the $200m mark, however that could rise as a cat bond only exposed to North Carolina has the potential to be attractive to investors looking to diversify.

One tranche of Johnston Re is said to be replacing the cover provided by Parkton Re as that deal expires in May 2011. We’ll bring you more details on Johnston Re as they become available and details will be added to our catastrophe bond Deal Directory.

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