RMS announced that it has conducted the expert risk analysis for two new catastrophe (cat) bonds: Bosphorus Re 1 Ltd. (Series 2013-1) cat bond; and the Tar Heel Re Ltd. (Series 2013-1) cat bond, launched in April 2013. With the recent series of cat bonds, RMS has modeled $1.2B of new issuance in 2013.
Bosphorus Re 1, sponsored by the Turkish Insurance Catastrophe Pool (TCIP), was upsized from its initial target of $100M after strong investor demand. The cat bond provides TCIP with $400M of protection against earthquakes in the Istanbul region of Turkey until April 2016. This transaction uses a parametric trigger based on a network of stations in and around Istanbul. This is the first transaction to bring pure parametric Turkey earthquake risk to the market, and investor demand drove the price down to a record low.
Tar Heel Re (Series 2013-1) is sponsored by North Carolina Joint Underwriting Association and North Carolina Insurance Underwriting Association (NCJUA/IUA), and was also upsized from its initial target of $250M. The cat bond provides NCJUA/IUA with $500M of protection against U.S. tropical cyclones until May 2016. RMS conducted the risk analysis using its RiskLink® version 11.0 U.S. Hurricane Model, and the deal is the first to include a number of sensitivity analyses around long and medium-term rate scenarios and storm surge leakage levels. This gives investors a range of modeled loss estimates to help inform more resilient risk management decisions.
“We are excited to see such strong investor demand for both of these transactions,” said Peter Nakada, managing director of RMS Capital Markets. “With a continuing interest and influx of investor capital into the Insurance Linked Securities market, now is a great time for cedants to lock-in attractively priced cover for the next few years. RMS is delighted to help facilitate this risk transfer, with these successful transactions.”
