Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Second Embarcadero Re cat bond being marketed for California Earthquake Authority


As expected, the California Earthquake Authority are returning to the catastrophe bond market to issue another cat bond using their dedicated Embarcadero Re Ltd. Bermuda based SPV. The first Embarcadero Re deal was issued in August last year and it secured them $150m of cover. Now, sources have confirmed to us that the second deal is being marketed and that the CEA are seeking another $150m of cover through a single tranch of Embarcadero Re Ltd. Series 2012-1 cat bond notes.

As with the first Embarcadero cat bond, this 2012-1 deal will use an indemnity trigger based on the CEA’s loss experience on an annual aggregate basis.

At the moment that is all the details that we have on the CEA’s Embarcadero Re 2012-1 cat bond. It’s encouraging to see that the CEA has, as planned, returned to the cat bond market using their dedicated reinsurer SPV. It will be interesting to see whether they can achieve the same value for money from a cat bond that they achieved in their first Embarcadero Re transaction. They said in their board meetings that $300m was available to put into the next reinsurance transformer (or catastrophe bond) transaction depending on price and market appetite, so we could see this transaction grow by the time it launches. We’ll update you when we have further details on the transaction.

The transaction has been added to our Deal Directory and we’ll update the information there as we receive it.

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