A.M. Best have joined Standard & Poor’s in downgrading the rating of the catastrophe bond notes issued in 2008 by Topiary Capital Ltd. (our article on S&P’s downgrade here). Topiary Capital, while not expecting a loss due to the 11th March earthquake disaster in Japan, has been activated meaning it is now at risk of any subsequent qualifying events over the remaining risk period.
A.M. Best have downgraded the rating of Topiary Capital Ltd’s $200m Series 2008-1 Class A notes from ‘BB+’ to ‘CCC’. The cat bond provided Platinum Underwriters with up to $200 million in second and subsequent event coverage for U.S. hurricanes and earthquakes, European windstorms and Japanese earthquake events which met the qualifying criteria over a three-year period.
Risk Management Solutions, who acted as calculation agent, confirmed that after analysis the Japanese earthquake qualified as the first event to activate this cat bond.