Reinsurance News

Pool Re renews and upsizes terror cat bond

9th March 2022 - Author: Matt Sheehan

UK government-backed terrorism reinsurer Pool Re has completed the placement of its second terrorism ILS catastrophe bond, following the maturing of its original issuance from 2019.

Pool Re logoIssued through a UK domiciled special-purpose vehicle, Baltic PCC Ltd., the 2022 notes were issued in a 144A format.

The bond increased in size to £100 million from the £75 million issued in 2019, with the risk spread reduced to 5.5% compared to 5.9% under the 2019 issue.

Julian Enoizi, Pool Re chief executive said: “This notable achievement demonstrates the continuing innovation and determination of Pool Re in returning a larger part of the risk to the commercial markets and protecting the UK taxpayer consistent with our commitment given as part of our five year review,” said Pool Re Chief Executive Julian Enoizi.

“I am also particularly pleased that we can demonstrate again the collaborative spirit that exists between Pool Re and HM Treasury by supporting the journey towards enhancing the UK’s ILS framework,” Enoizi added. “This will certainly strengthen our industry’s contribution to the UK economy and enhance London’s position in a global industry.”

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Reinsurance News first reported on the renewed and upsized catastrophe bond issuance from Pool Re when the reinsurer released details of its retrocession program for the coming year.

The total coverage provided by the program increased from $2.475 billion last year to $2.5 billion in 2022, with the difference made up by the enlarged catastrophe bond issuance.

“We were delighted by the significant interest and appetite from the markets, which has led to an increase in the overall number of investors compared to 2019,” said Ian Coulman, Pool Re’ Chief Investment Officer.

“This strong interest from the capital markets has led to a reduced spread and increased size of the bond and is important as we work to bring in new sources of capital to cover terrorism risk reinsurance.”

GC Securities, a division of MMC Securities LLC, acted as the structuring and placement agent for the three-year bond, which provides cover on an annual aggregate basis.

Economic secretary to the Treasury, John Glen, also commented: “It’s great to see Pool Re successfully renew and increase its second Insurance Linked Securities for terrorism risk – ensuring taxpayers are further insulated from the financial costs of terrorist acts, with private markets committing to cover a greater share.”

David Priebe, Guy Carpenter chairman, further stated: “We are very pleased to support Pool Re on this important terrorism risk transfer transaction.  It demonstrates growing expertise and flexibility of the ILS market with respect to a broader spectrum of risks.”

And finally, Cheng Li Yow, corporate partner at Clifford Chance, said: “We were delighted to advise Pool Re again on its second ILS transaction through Baltic PCC Ltd. The deal is another strong endorsement of the UK’s ILS and PCC regime and closing it would not have been possible without the effective support of the PRA.”

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