Loma Reinsurance Ltd. catastrophe bond from Argo Re completes sucessfully


Argo Re’s first catastrophe bond, Loma Reinsurance Ltd., has completed successfully giving the Bermuda based reinsurer $100m of second and subsequent event coverage for perils across three continents. The deal provides Argo Re with cover for hurricanes and earthquakes in the U.S., windstorms in Europe and earthquakes in Japan on a per-occurrence basis.

It’s encouraging to see this deal complete successfully, particularly given the inclusion of U.S. hurricane risks at this time of year and Japanese earthquake risk which it seems insurance-linked securities investors are still happy to invest in and assume despite the recent disaster.

The Cayman Islands based SPV Loma Re issued $100m of Class A notes in this transaction and priced slightly above the level at which it was marketed (as have other recent cat bonds) at 950 basis points above Libor.

As it is structured as a second and subsequent event cat bond Loma Re can only be activated, after which it is on risk for subsequent events, by a U.S. hurricane or earthquake or Japanese earthquake causing over $30 billion of losses or a European windstorm causing over $10 billion of losses.

Standard & Poor’s have assigned a rating of ‘BB-‘ to the notes issued by Loma Re Ltd. The successful issuance of Loma Reinsurance Ltd. brings 2011 catastrophe bond issuance to $1.757 billion.

For further details on this transaction visit our catastrophe bond Deal Directory.

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