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Cat bond to cover Louisiana tropical cyclone risks

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Cat bond to cover Louisiana tropical cyclone risks

GC Securities has completed the placement of a new catastrophe bond, Pelican III Re Ltd., to cover tropical cyclone risks in Louisiana, the Guy Carpenter & Co. L.L.C. unit said Thursday.

Pelican III Re Ltd. will provide Louisiana Citizens Property Insurance Corp. with $100 million of per-occurrence coverage for tropical cyclone-related losses for three years, GC Securities said in a statement.

The new bond replaces Louisiana Citizens' maturing catastrophe bond protection at a 56% price reduction and improved structural features, including broader definition of named storms and increased flexibility with respect to the annual reset option, according to the statement.

This is the third time that Louisiana Citizens has utilized the cat bond market to manage its tropical cyclone risks, the statement said.

“This transaction exemplifies the benefit of the convergence between the reinsurance and capital markets and demonstrates the value that Louisiana Citizens achieved in utilizing the catastrophe bond market to meet its risk transfer needs,” David Priebe, vice chairman of Guy Carpenter, said in the statement.

“Catastrophe bonds are an important part of our total reinsurance strategy,” Louisiana Citizens Chief Financial Officer Steve Cottrell said in the statement.

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