Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Turkish quake cat bond issuer changes name to Bosphorus Re


The issuing special purpose reinsurance vehicle of the first Turkish earthquake linked catastrophe bond Bosphorus 1 Re Ltd. has changed its official company name to Bosphorus Re Ltd., according to a Bermuda Stock Exchange announcement.

The Bosphorus catastrophe bond was issued on behalf of the Turkish Catastrophe Insurance Pool (TCIP) as it sought to secure a multi-year source of earthquake reinsurance protection from the capital markets.

At the time of the cat bonds launch, the naming of the Bermuda domiciled special purpose insurance vehicle did seem strange, given the ability to issue a number of series of notes within a single vehicle over a five-year period. Typically a cat bond sponsor will use one SPV for a number of issues, identifying them with the series and year.

Naming the vehicle Bosphorus 1 Re always looked set to create confusion if a second cat bond series were to be issued through it. Now it seems that the TCIP has taken the decision to change the name to simplify this, adopting the same process of using the series and year designation to differentiate between its cat bonds.

So, perhaps this means another Bosphorus is on the way? Market rumours suggest that this may be the case. In fact another publication recently suggested that an indemnity version of the Bosphorus cat bond, the first used a parametric trigger, was likely in the works.

Over a year ago when we spoke with the reinsurance buyer responsible for the TCIP’s cat bonds he told Artemis that an indemnity deal would be preferable next time around. TCIP executives also expressed an appetite to issue a second Bosphorus cat bond.

It will be interesting to see whether the insurance-linked investment community buys into the TCIP’s claims process enough to support this goal, of an indemnity bond, without demanding a premium. Given the appetite for new cat bond risk currently, it is likely that investors will be ready to support this change of structure as long as the insurers claims process is well-documented and transparent.

We will of course keep you posted should a new catastrophe bond be launched using the Bosphorus Re Ltd. special purpose vehicle later this year.

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