New cat bond finalized through Charles River Re

New cat bond finalized through Charles River Re | Insurance Business Canada

Reinsurance

New cat bond finalized through Charles River Re

Bond surpassed target by 25% and is primed to cover against named storms

Reinsurance

By
Kenneth Araullo

American European Insurance Company and ShoreOne Insurance Managers have announced their sponsorship of the Charles River Re Ltd. Series 2024-1 catastrophe bond.

The bond, initially targeted at $100 million, ultimately secured $125 million, marking a 25% increase in size.

This transaction involves American European entering a reinsurance contract with Charles River Re, which is set to provide coverage against named storms.

In a news release, American European explained that the new cat bond benefits the company through a broadening of its risk transfer capacity and by facilitating access to capital markets. The bond will also support ShoreOne-managed policies underwritten on behalf of American European.

The cat bond issued by Charles River Re Ltd. features Class A Notes with a spread of 6.75%, an initial base expected loss of 1.87%, and uses an indemnity trigger over a three-year term. It is scheduled to mature on May 10, 2027.

The bond was successfully closed on April 11, 2024, with GC Securities, a division of MMC Securities LLC, acting as the sole structuring agent and bookrunner.

Cameron Rhodes, president and chief operating officer of ShoreOne, highlighted the significance of this development in its operations.

“This catastrophe bond is another milestone in ShoreOne’s history and in its partnership with American European. This risk transfer protection will strengthen our ability to jointly address the coverage gap for coastal homeowners and the associated flood risk they face,” Rhodes said.

Nachum Stein, CEO of American European, also emphasized the strategic role of the new catastrophe bond in their reinsurance strategy.

“Our catastrophe bond is an essential part of our reinsurance structure and complements a tower backed by industry-leading reinsurers. We are pleased to have successfully sponsored our first catastrophe bond, and done so in partnership with ShoreOne, our valued partner in the coastal homeowner’s market. We are grateful for the strong investor support for our collective mission,” Stein said.

What are your thoughts on this story? Please feel free to share your comments below.