The insurance-linked securities landscape is changing, and one Canadian brokerage is seizing that opportunity through a recent catastrophe bond transaction in the United States.
A recent catastrophe bond transaction between Willis Capital Markets & Advisory (WCMA) recently completed a (US)$250 million cat bond transaction for State Compensation Insurance Fund (SCIF), California’s largest provider of workers’ compensation insurance.
“The pricing that State Fund was able to obtain on Golden State Re II highlights the rapidly changing dynamics in the ILS landscape over the last three years,” says Tony Ursano, the CEO of Willis. “For a similar layer that was placed in 2011, State Fund was able to obtain 25 per cent more capacity while pricing dropped more than 40 per cent. We expect investors to continue to welcome well-structured deals as capacity continues to seek ways to access insurance risk.”
WCMA is a part of global risk advisor, insurance and reinsurance broker Willis Group Holdings plc.
The transaction provides SCIF with $250 million of fully collateralized protection for workers’ compensation against California earthquake over a term of slightly more than four years and three months.
Golden State Re II – representing SCIF’s second time accessing catastrophe bond capacity (the first bond transaction being in 2011) – has been upsized from $150 million to $250 million and the renewal transaction features a modelled loss trigger on a per occurrence basis. The transaction will replace a $200 million transaction as SCIF chose to increase the capacity it sources from the capital markets.
