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Munich Re has provided a $305 million catastrophe bond transaction that transfers hurricane risk in North Carolina to the capital markets for the North Carolina Joint Underwriting Association and North Carolina Insurance Underwriting Association.
Munich Re acted as joint lead manager in the transaction, reinsured the risk via its US operation and placed the bond with institutional investors in the EU and Switzerland via its placement entity.
Munich Reinsurance America has reinsured a portion of two catastrophe hurricane risk layers of the North Carolina Joint Underwriting Association and North Carolina Insurance Underwriting Association which have been fully retroceded to Cayman Islands-registered Johnston Re, providing coverage up to a maximum of $305 million.
Johnston Re has issued two tranches of a principal at-risk variable rate note program with a three year risk period. The first tranche uses a ‘drop-down’ feature that will replace the expiring Parkton Re 2009-1 bond after one year. The second tranche will stay for three years at the same level directly above the first tranche.
The issuance was significantly oversubscribed and due to strong demand upsized from the originally announced $200 million.