GC Securities places first terrorism Cat Bond

GC Securities has announced the placement of GBP75,000,000 Series 2019 Principal At-Risk Variable Rate Notes issued through Baltic PCC Limited, a protected cell company domiciled in the UK, on behalf of Pool Re.

The cat bond provides multi-year, indemnity retrocession protection for terrorism risk in the UK and breaks new ground on multiple fronts. The innovative transaction is the first to transfer standalone terrorism risk to the ILS market, the first ever issuance in sterling and the first issuance to use Computational Fluid Dynamic modelling for the risk analysis. Baltic PCC is also the first protected cell company to issue a cat bond under the UK Risk Transformation Regulations 2017. GC Securities served as the sole structurer and placement agent for the transaction.

“It was a privilege to work with the Pool Re team on their inaugural and innovative cat bond transaction, which was well supported by a globally diverse panel of sophisticated ILS market investors,” stated Des Potter, managing director, GC Securities in a press release.

Pool Re recently launched the first ever “catastrophe bond” to cover the risks of terrorism, fanning hopes in the industry that such instruments can expand beyond their traditional heartland of windstorms and earthquakes. The cat bond, which allows investors to directly back insurance risks via the capital markets, will pay out if terror attacks in the UK cause more than GBP750m of losses in a single year. The three-year, USD75m bond, called Baltic PCC, carries a 5.9 per cent coupon.