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Member, Beacon International Group, Ltd.
HARTFORD, Conn.—A catastrophe bond placed by Hartford Fire Insurance Co., a unit of Hartford Financial Services Group Inc., has been increased to $180 million due to strong investor demand, market sources confirmed Wednesday.
The bond, Foundation Re III Ltd., originally was marketed to investors with a target size of $100 million. The transaction, which is expected to close this week, will allow the Hartford, Conn.-based insurer to transfer a portion of its U.S. hurricane risks to the capital markets through 2014.
The bond uses a state-weighted Property Claims Services index-based industry loss trigger, according to New York-based Standard & Poor’s Corp., which rated the notes BB+. Collateral from the sale of the notes will be invested in highly rated U.S. Treasury money market funds, S&P said.
A dramatic drop in cat bond pricing and strong investor demand are creating favorable conditions for sponsors to issue bonds, and experts have predicted strong activity levels for the sector this year.