With the listing of insurer USAA’s latest, and twenty-first, catastrophe bond transaction, Residential Reinsurance 2013 Ltd. (Series 2013-2), the Cayman Islands Stock Exchange (CSX) has announced its 200th catastrophe bond listing on the exchange.
USAA’s latest cat bond, which provides it with a source of fully-collateralized reinsurance protection, using an indemnity trigger and on a per-occurrence basis over a four-year period for multiple-perils, contains perhaps the riskiest tranche, with the highest probability of attachment and expected loss, ever issued in the catastrophe bond market.
Nevertheless, the investor community showed its support for such a risky layer and helped USAA to upsize the transaction, it grew in size by 25%, from a launch size of $120m to price at $150m, while at the same time the pricing dropped as the notes came to market. More details on the cat bond can be found in the Deal Directory.
Following the admission to listing of the $150 million Series 2013-2 principal at-risk variable rate notes issued by Residential Reinsurance 2013 Limited, there have now been 200 catastrophe bonds and vehicles listed by the CSX since its first cat bond listing in April 2007.
The amount outstanding issuance of insurance-linked securities (ILS), largely catastrophe bonds, on the CSX has now reached $9.48 billion, which represents 81 listings by 31 companies.
The CSX announced yesterday a reduction in its listing fees which will allow for listings of cat bond issuance programmes and series of notes for a combined application fee of $2,000. The CSX said that the reduction in fees was made possible by the introduction of a streamlined listing application process.
Commenting on the latest cat bond listing and the reduction of fees, CSX CEO Valia Theodoraki said; “The fees reduction and new listing process reflect our cumulative experience of listing ILS. When cat bonds first came to the CSX in 2007 this was still seen as an exotic product but we have over the years developed significant expertise and strong relationships with the advisers to the point that we are now able to fast-track these listings. The fees reduction is our way of handing back to our users some of the benefits of those efficiencies.”
The CSX also provided a brief update on its project to bring an exchange traded catastrophe instrument onto the exchange. The project, which the CSX is working on with Property Claims Services (PCS), aims to develop on-exchange trading of securitised products linked to natural catastrophe risk.
The products, which will be tradable on the CSX’s new XETRA platform, will incorporate payout mechanisms linked to data provided by the industry loss estimate provider PCS. The CSX said that this project is expected to go live next year.