operational risk

As broadly anticipated in the market, the $217.25 million of operational risk catastrophe bond notes  issued by Operational Re IV Ltd. have now been redeemed, following the acquisition of the beneficiary of the protection, Credit Suisse, by rival UBS.

The operational risk catastrophe bonds issued earlier this year that serve as a vehicle to channel capital market investor funding of operational risk insurance to investment bank and asset manager Credit Suisse are not expected to be impacted by the bank’s forced sale to rival UBS.

Having once been considered at-risk, due to perceived potential exposure to sponsor Credit Suisse’s challenges related to Archegos and Greensill Capital, we’ve learned that the Operational Re III Ltd. operational risk catastrophe bond was matured, redeemed early and investors repaid in full, while going forwards the latest issuance has no exposure to these events.

A fourth securitization of operational risks in a catastrophe bond format has now completed, Artemis can reveal, with $217.25 million of notes issued by Operational Re IV Ltd., assumed to be the latest example of a vehicle channelling a capital market investor source of operational risk insurance to investment banking giant Credit Suisse.

According to Bloomberg news, the Operational Re III Ltd. operational risk catastrophe bond is viewed by investors and holders as potentially at-risk on the challenges faced by the beneficiary of the coverage, investment bank Credit Suisse, due to the Archegos and Greensill Capital issues.

A new $461.22 million operational risk catastrophe bond transaction has successfully been issued, with the ultimate beneficiary of the operational risk insurance protection provided by the new Operational Re III Ltd. deal being investment banking giant Credit Suisse, Artemis has learned.

We are now able to confirm that investment bank Credit Suisse is the ultimate beneficiary of the collateralised coverage offered by the recently completed CHF 146 million Operational Re II Ltd. insurance-linked securities (ILS) or catastrophe bond like arrangement that transfers operational risk exposure to the capital markets.

A new operational risk catastrophe bond, Operational Re II Ltd., an insurance-linked securities (ILS) or cat bond like arrangement transferring operational risk exposure to the capital markets, has been successfully completed at a size of CHF 146 million (approx US $148m).

Investment bank Credit Suisse’s Operational Re Ltd. ILS transaction, which saw a catastrophe bond structure used to secure insurance via the capital markets for its operational risk exposures, has helped the bank to reduce its risk weighted assets (RWA’s) by 1.25 billion Swiss Francs, according to a report.

Insurance giant Zurich is considering leveraging the capital markets and ILS investors as a way to offload more bank related operational risk, in similar arrangements to the recently completed Operational Re Ltd. deal for investment bank Credit Suisse.