The FINANCIAL -- Swiss Re Capital Markets has successfully structured and placed the issuance of USD 925 million of insurance-linked securities by Ursa Re Ltd., to be used for the protection of the California Earthquake Authority ("CEA").
The transaction is one of the largest indemnity, annual aggregate catastrophe bonds and covers California earthquakes. With this deal the CEA is well prepared to handle the economic consequences of potential earthquakes.
Swiss Re Capital Markets underwrote the transaction through two classes of principal-at-risk variable rate notes issued by Ursa Re Ltd., a Bermuda exempted company licensed and registered as a special purpose insurer under the Bermuda Insurance Act 1978 and related regulations, each as amended.
The CEA entered into two reinsurance agreements with Ursa Re Ltd. receiving protection on an indemnity, annual aggregate basis, against residential homes for earthquake damage in California. Ursa Re Ltd. collateralised its liabilities under the reinsurance agreements via the issuance of USD 425 million Class B Notes and USD 500 million Class E Notes to capital markets investors. Both Classes of Notes have a three-year risk period starting May 17, 2017, according to Swiss Re.
"Swiss Re is pleased to provide continued support to the CEA on its largest catastrophe bond issuance to date. The transaction was well received by investors, as demonstrated by, among other factors, the final issuance size," said Judy Klugman, Co-Head of ILS at Swiss Re Capital Markets. "We were also glad to be able to support the CEA in its desire to make future issuances more efficient by introducing pre-modeled Program Notes. Such Program Notes are intended to allow the CEA to tap investor demand on a more timely and cost efficient basis."
Swiss Re Capital Markets acted as the sole structuring agent and joint bookrunner.
The Ursa Re Ltd. notes were sold pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended (the "Securities Act") and have not been registered under the Securities Act or any state securities laws; they may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.