Swiss Re closes Singapore US$100m ILS deal

May 29 2019 by InsuranceAsia News Staff

Broker Swiss Re Capital Markets has helped place a US$100 million ILS cat bond deal for Florida insurer Security First.

The transaction is the first cat bond issued under Rule 144A of the US Securities Act 1933 that has used the insurance-linked securities (ILS) regulatory regime in Singapore and is Security First’s third cat bond.

Swiss Re America acted as the conduit between Security First and investors. The transaction had a single class of principal at-risk variable rate notes issued by First Coast Re II, a special purpose reinsurance vehicle incorporated in Singapore.

As part of the transaction structure, Security First has entered into a reinsurance agreement with SRAC, which provides protection on an indemnity per occurrence basis with a “cascading feature”. SRAC subsequently ceded the risk via a retrocession agreement to the issuer.

The US$100 million Class A notes have a four-year risk period starting June 1 and provides protection against named storms and severe thunderstorms in Florida.

Jayne Plunkett, Swiss Re’s Asia chief executive, commented: “Swiss Re is excited to actively contribute to the development of Singapore as a global financial hub and promote a vibrant insurance-linked securities market in the region. This cat bond also underscores Singapore’s capabilities in facilitating such a transaction.”

Jean-Louis Monnier, global co-head of ILS at Swiss Re Capital Markets, said: “The transaction was very well received by investors, which was reflected in the final terms and upsize to US$100 million. The protection provided by SRAC seamlessly integrates with Security First’s reinsurance programme and incorporates a cascading feature mirroring traditional terms.”

Swiss Re Capital Markets acted as the sole structuring agent and bookrunner in the agreement.

The first cat bond under Singapore’s ILS regime was issued to IAG earlier this year.