NEW YORKChartis Inc. said Thursday that it has obtained $425 million in reinsurance through its first catastrophe bond program.
The bond, issued through Bermuda-based special-purpose vehicle Lodestone Re Ltd., closed Wednesday, significantly larger than its target size of $250 million, the property/casualty insurer said.
The transaction provides Chartis subsidiary National Union Fire Insurance Co. of Pittsburgh, Pa., with fully collateralized coverage against losses from U.S. hurricanes and earthquakes on a per-occurrence basis until May 2013.
The bond will use an index trigger with state-specific factors.
For Chartisa first-time issuer of cat bondsthe transaction represents another important milestone in the company’s “pursuit of increasing financial flexibility and enhancing our risk management capabilities,” President and CEO Kristian P. Moor said in a statement.
The transaction, for which Newark, Calif.-based Risk Management Solutions Inc. conducted risk modeling, comes after several other recently upsized deals.
Recently closed cat bonds include Assurant Inc.’s $150 million bond, Ibis Re II Ltd., and Munich Re America Insurance Inc.’s $305 million bond, Johnston Re Ltd.