GC Securities said it has placed a newly formed catastrophe bond shelf program with China Re – the first of its kind to benefit Chinese insurers/reinsurers and perils.
The announcement of the Guy Carpenter division (which is also part of Marsh & McLennan Companies), involves the China Property & Casualty Reinsurance Company and China Reinsurance Corp., both of which are China Re.
“We are proud to have assisted China Re in the execution of this historic transaction, which exemplifies the benefit of the convergence between the reinsurance and capital markets,” David Priebe, vice chairman of Guy Carpenter, said in prepared remarks.
Specifically, GC Securities is placing Series 2015-1 Class A Principal At-Risk Variable Rate Notes due July 9, 2018, with a notional principal of $50 million. This is through a cat bond shelf program known as Panda Re Ltd. GC Securities was also sole structure and sole placement agent.
GC Securities noted that this is the first time that China Re is using cat bonds to manage its natural peril risks, and the first cat bond to benefit a Chinese insurer or reinsurer. What’s more, through Panda Re, cat bond investors are gaining exposure to Chinese perils for the first time.
Li Yuanyuan, general manager of China Re P&C, said in prepared remarks that he hopes the deal “is a good sign of opening the door to transferring Chinese catastrophe risks to the capital markets.”
The Series 2015-1 notes are denominated with Panda Re’s limit to China Re based on U.S. dollars. But GC Securities noted that they’re positioned alongside some parts of China Re’s traditional retrocession program, a move that provides per occurrence protection from earthquakes on indemnity trigger basis.
Source: GC Securities