Wildfire catastrophe bonds transfer wildfire risk to the capital markets, as a mechanism through which insurers, reinsurers or corporate sponsors can access reinsurance risk capital from investors.
Wildfire cat bonds are a small part of the overall catastrophe bond market, but a valuable one as sourcing risk capital from traditional reinsurance markets for this peril can be challenging and costly, hence the capital markets provide welcome additional capacity.
Read our wildfire cat bond news and analysis on this page.
A new catastrophe bond transaction has been launched to the market and the SD Re Ltd. (Series 2018-1) transaction is set to become the second California wildfire cat bond covering third-party liability costs, benefiting utility firm Sempra Energy and subsidiaries.
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California focused electrical utility PG&E Corporation (the Pacific Gas and Electric Company) now benefits from $200 million of insurance protection against losses related to wildfires, through the completion of Cal Phoenix Re Ltd. (Series 2018-1), the first catastrophe bond to benefit a corporate sponsor using an indemnity trigger.
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The Cal Phoenix Re Ltd. (Series 2018-1) catastrophe bond transaction, which is the first pure wildfire exposed deal that will benefit California focused electrical utility PG&E Corporation (the Pacific Gas and Electric Company), may increase in size slightly, but at the same time the proposed coupon has risen 20%.
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The first pure wildfire exposed catastrophe bond has come to market, as California focused electrical utility PG&E Corporation (the Pacific Gas and Electric Company) turns to the capital markets and ILS investors as a source of collateralized insurance protection with a $200 million Cal Phoenix Re Ltd. (Series 2018-1) transaction.
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