Glacier Reinsurance AG said today it has set up a Cayman Islands-based unit to issue $1.5 billion of catastrophe bonds.

The Switzerland-based carrier said the first issuance of the Series 2007-I Notes has been capitalized by raising $75 million in the form of bonds from a group of institutional investors.

The bonds have been rated "B" by Standard & Poor's Rating Services and "b-minus" by A.M. Best Company. The new carrier, Nelson Re, has entered into a reinsurance agreement with Glacier Re under which it will provide fully collateralized reinsurance protection.

The reinsurance agreement will initially provide Glacier Re with excess of loss protection for three major perils: U.S. earthquake, U.S. windstorm and Europe windstorm.

Glacier Re and Nelson Re may enter into reinsurance agreements covering other perils in the future, the company said.

Robbie Klaus, chief executive officer and chief underwriting officer at Glacier Re, said the transaction "is a significant milestone in Glacier Re's development. Nelson Re provides us with highly valuable reinsurance protection and broadens Glacier Re's profile amongst institutional investors. Nelson Re's shelf program structure also gives us significant flexibility, to help meet our future risk protection needs."

Special Reports /

Swiss Reinsurer Sets $1.5B Cat Bond Plan

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