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Willis places $250M earthquake cat bond for California workers comp fund

Willis places $250M earthquake cat bond for California workers comp fund

Willis Capital Markets & Advisory has completed a $250 million earthquake catastrophe bond for California's State Compensation Insurance Fund, the Willis Group Holdings P.L.C., unit said Friday.

Golden State Re II, which closed Sept. 16, provides California's largest workers compensation insurance provider with $250 million of fully collateralized coverage for workers compensation against California earthquake risks for a term of just over four years.

It features a modeled loss trigger on a per-occurrence basis similar to the one used in the fund's first $200 million catastrophe bond in 2011, Willis Capital Markets & Advisory said in a statement.

The bond was increased to $250 million from an initial $150 million, settling at the low end of initial pricing guidance of 2.20% to 2.70%.

“The pricing that State Fund was able to obtain on Golden State Re II highlights the rapidly changing dynamics in the (insurance-linked security) landscape over the last three years,” Tony Ursano, CEO of Willis Capital Markets & Advisory, said in the statement. “For a similar layer that was placed in 2011, State Fund was able to obtain 25% more capacity while pricing dropped more than 40%. We expect investors to continue to welcome well-structured deals as capacity continues to seek ways to access insurance risk.”

Golden State Re II is Willis Capital Markets & Advisory's seventh successful cat bond placement of 2014 and fifth as sole manager, the company said in its statement.

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