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Matthew Lerner

World Bank issues $30M catastrophe bond to cover Caribbean risks

July 1, 2014 - 1:03pm

World Bank Caribbean Catastrophe Bond

A tropical cyclone in Havana, Cuba.


The World Bank has issued a $30 million catastrophe bond through its newly created Capital-at-Risk Notes Program to cover earthquake and tropical cyclone risk in 16 Caribbean countries.

The bond allows the Washington-based World Bank, a United Nations financial institution that provides loans to developing countries, to provide reinsurance to the Caribbean Catastrophe Risk Insurance Facility, the bank said Monday in a statement. The CCRIF is a risk-pooling facility designed to limit the financial impact of catastrophic earthquakes and hurricanes on its 16 Caribbean member governments by providing funds quickly when a policy is triggered, the bank said.

“With this first transaction under the Capital-at-Risk Notes Program, CCRIF benefits from access to the highly competitive prices offered by the cat bond market as well as from the efficiency of using this program,” Madelyn Antoncic, vice president and treasurer at the World Bank, said in the statement.

The placement agent for the cat bond is GC Securities, a division of Guy Carpenter & Co. L.L.C., which acted as co-structuring agent with Munich Reinsurance Co. Swiss Re Capital Markets, a unit of Swiss Re Ltd., acted as adviser to the World Bank

“CCRIF is always actively trying to source the best policy pricing for existing and new members, and this cat bond will provide strategic benefits in that it will broaden capacity over time which in turn would help to better manage volatility in the reinsurance market,” Isaac Anthony, CEO of the Caribbean Catastrophe Risk Insurance Facility, said in the statement.

“The creation of the World Bank's cat bond issuance program is an important innovation that will open new markets for public-sector sponsors and significantly streamlines the issuance process in terms of time and cost,” Cory Anger, global head of ILS structuring for GC Securities, said in a separate statement from Guy Carpenter.

 



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