Standard & Poors Assigns Tar Heel Ratings
Standard & Poor’s Ratings Services yesterday [Apr.10] assigned its B+ rating to the $500 million of series 2013-1 notes issued by Bermuda’s Tar Heel Re Ltd.
Recently listed on the Bermuda Stock Exchange, the newly launched catastrophe bonds will cover losses in North Carolina from hurricanes on an annual aggregate basis.
S&P said the rating is “based on the lower of the rating on the catastrophe risk [B+], the rating on the assets in the issuer’s collateral account [AAA], and the rating on the ceding reinsurer [AA-].
“Covered losses will not be directly linked to Munich Re America’s exposure in North Carolina, but rather they will be based on the actual losses of the North Carolina Joint Underwriters Assn. [NCJUA] and the North Carolina Insurance Underwriters Association [NCIUA].”
The bulletin also noted that “this is the fourth catastrophe bond sponsored by the NCJUA/NCIUA to be rated by Standard & Poor’s, though the first one modeled by Risk Management Solutions Inc.
Due to the significant differences between the ways AIR Worldwide Corp. and RMS model losses, the stress rate we applied to the aggregate exceedance probability curve was higher as compared with the indicative level for indemnified transactions set forth in our criteria.
