Amlin transfers US hurricane, US earthquake and European windstorm risks to the capital markets
23 December 2011
Amlin plc announces that it has acquired coverage for US
hurricane, US earthquake and European windstorm perils of up to
US$150 million from a Bermudian special purpose insurer, Tramline
Re Limited, which in turn is placing a catastrophe bond for this
amount into the capital markets.
The transaction provides the Amlin Group with fully collateralised
protection over a 3 year period from 1 January 2012 against
cumulative modelled insurance and reinsurance claims of in excess
of US$630 million in a single year from US Hurricanes and US
Earthquakes (defined as gross insurance and gross reinsurance
claims) and/or European Windstorms (defined as gross reinsurance
and net insurance claims), where such modelled claims per event are
in excess of US$75 million.
This cover is in addition to the protection that Amlin purchases
through the traditional reinsurance marketplace and provides
significant tail risk protection for the Group. The cover provided
by the bond is based on market share factors applied to market
industry losses as reported by PCS for the US and PERILS for
Europe.
As part of the transaction Amlin AG has entered into a risk
transfer contract with Tramline Re Limited which will issue to
investors $150 million of three year principal-at-risk variable
rate notes. The proceeds of these notes will comprise the
collateral for Tramline Re Limited’s obligations to Amlin AG
pursuant to the risk transfer contract. Amlin’s Lloyd’s
Syndicate 2001 and Amlin Corporate Insurance will also benefit from
the cover provided by the bond through arrangements between them
and Amlin AG.
The transaction has been structured and arranged by Aon Benfield
Securities with risk modelling provided by AIR Worldwide.
Charles Philipps, chief executive of Amlin plc, said: “The
protection afforded under this bond will complement our traditional
reinsurance programme and protect the Group from frequency of major
catastrophe losses allowing us to consolidate our position in
improving market conditions.”
