Chartis: $450m In Catastrophe Coverage
Bermuda-based Chartis today (Dec.28) announced that it has entered into a reinsurance transaction with fellow local re/insurer Lodestone Re, which will provide $450 million of protection to Chartis against US hurricanes and earthquakes.
Chartis, with headquarters on Richmond Road, Pembroke, is the former property casualty insurance division of AIG currently in the process of being spun off.
“This represents a substantial increase from the $250 million of protection originally sought by Chartis,” said the bulletin. “To fund its obligations to Chartis, Lodestone Re issued a catastrophe bond in two tranches – $125 million of Class A-1 notes and $325 million of Class A-2 notes.”
Lodestone Re is a special purpose insurer, incorporated under the laws of Bermuda, which has established a programme structure enabling potential future catastrophe bond issuances.
The transaction, which closed on December 20, provides Chartis with “fully collateralised coverage against losses from US hurricanes and earthquakes on a per-occurrence basis through December 2013 using an index trigger with state-specific payment factors.”
The new transaction follows Chartis’ earlier reinsurance transaction with Lodestone Re, which closed on May 12, 2010 and provided $425 million of protection to Chartis against US hurricanes and earthquakes on a per-occurrence basis until May 2013.
Chartis president and CEO Kristian P. Moor commented: “As part of our continuing effort to obtain reinsurance coverage supported by capital market instruments, this transaction represents another important milestone in Chartis’ pursuit of increasing financial flexibility and enhancing our risk management capabilities.”
