Swiss Re Capital Markets structures and places the first catastrophe bond under Singapore's new ILS framework for Security First Insurance Company
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Swiss Re Capital Markets successfully closed the USD 100 million Series 2019-1 Principal At-Risk Variable Rate Notes transaction issued by First Coast Re II Pte. Ltd on behalf of Security First Insurance Company ("Security First"). This transaction is the first catastrophe bond issued under Rule 144A that utilizes the new insurance-linked security ("ILS") regulatory regime in Singapore and represents Security First's third catastrophe bond transaction. Swiss Re Capital Markets acted as the sole structuring agent and bookrunner.
Swiss Reinsurance America Corporation ("SRAC") acted as a transformer of risk between Security First and capital market investors to facilitate the issuance process. The pioneering transaction had a single class of principal at-risk variable rate notes issued by First Coast Re II Pte. Ltd., a special purpose reinsurance vehicle incorporated in Singapore (the "Issuer").
As part of the transaction structure, Security First has entered into a reinsurance agreement with SRAC, which provides protection on an indemnity per occurrence basis with a cascading feature. SRAC subsequently ceded the risk via a retrocession agreement to the Issuer. The USD 100 million Class A notes have a four-year risk period starting June 1, 2019 and provide protection against named storms and severe thunderstorms in Florida.
“Swiss Re is excited to actively contribute to the development of Singapore as a global financial hub and promote a vibrant insurance-linked securities market in the region. This cat bond also underscores Singapore's capabilities in facilitating such a transaction,” says Jayne Plunkett, CEO Reinsurance Asia, Swiss Re.
Jean-Louis Monnier, Global Co-Head of ILS at Swiss Re Capital Markets says: “Swiss Re is pleased to support the ILS framework in Singapore and contribute to the knowledge transfer around ILS transactions in the region. We were delighted to work with the Monetary Authority of Singapore (MAS) and Security First to make the first Rule 144A issuance in Singapore a success. The transaction was very well received by investors, which was reflected in the final terms and upsize to USD 100 million. The protection provided by SRAC seamlessly integrates with Security First’s reinsurance programme and incorporates a cascading feature mirroring traditional terms.”
The First Coast Re II Pte. Ltd. notes were sold pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended (the “Securities Act”) and have not been registered under the Securities Act or any state securities laws; they may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject, to the registration requirements of the Securities Act and applicable state securities laws.
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Swiss Re Capital Markets
In the U.S., securities products and services are offered through Swiss Re Capital Markets Corporation, a registered broker dealer and a member of FINRA and SIPC. In the European Union, securities products and services are offered through Swiss Re Capital Markets Limited. Swiss Re Capital Markets Limited is authorized and regulated in the U.K. by the Financial Conduct Authority, and benefits from a passport into certain Member States of the European Union pursuant to the Markets in Financial Instruments Directive 2004/39/EC. Swiss Re Capital Markets Corporation and Swiss Re Capital Markets Limited, together “Swiss Re Capital Markets”, are wholly owned subsidiaries of Swiss Re Ltd.
The Swiss Re Group is one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cyber crime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally. It is organised into three Business Units, each with a distinct strategy and set of objectives contributing to the Group’s overall mission.
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