Allianz Global Corporate and Specialty said a new catastrophe bond it is issuing will cover $150 million of severe river flood risk in Great Britain, along with earthquakes in Canada and the United States, excluding California.
The deal represents part of a $1 billion program of Blue Wings Ltd, a special purpose vehicle launched for the benefit of Allianz Global.
The transaction will be fronted by Swiss Re, which also acted as arranger and lead manager, Allianz said.
"This is a flexible tool and an important step in the risk transfer mechanisms of the future, enabling us to manage and optimize our exposure to catastrophic events," explained Axel Theis, chief executive officer of Allianz Global.
The cat bonds hold the earthquake risk using a "modeled loss" trigger and the river flood risk using a second-generation parametric index trigger, which Mr. Theis described as the innovative part of the project.
The index for floods is based on flood depths that will be calculated in more than 50 locations across Great Britain.
Allianz Global Corporate & Specialty is based in Munich and was founded last year. It is backed by the Allianz Group.
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