Benfield Makes Placement For Caribbean Governments

London-based broker Benfield announced today it has completed the placement of a risk transfer program for the Caribbean Catastrophe Risk Insurance Facility (CCRIF), which became operational today.

The program for the multicountry disaster facility includes a combination of traditional excess of loss reinsurance and a funded cat swap derivative agreement. This will cover parametric insurance policies issued by the facility to 16 Caribbean governments.

Benfield said the CCRIF has been established on behalf of CARICOM under the guidance of the World Bank, with donor funding, to provide participating countries in the Caribbean region with immediate liquidity after natural disasters.

After being appointed as the CCRIF's sole reinsurance broker in February 2007, Benfield said it considered a variety of reinsurance structures. These included a combination of proportional and nonproportional reinsurance, catastrophe bonds and other financial products.

The final structure, Benfield said, was supported by Munich Re as leader and Paris Re and Hiscox as following markets. The cat swap was selected by the CCRIF as the most suitable capital markets structure due to timing pressure and pricing factors.

The brokerage said it brought together a cross-discipline team of experts from its Latin America and Caribbean team in London, ReMetrics, and its Structured Products team to develop and structure the CCRIF's reinsurance program.

Benfield Advisory, Benfield's specialist corporate finance and advisory business, assisted the World Bank Treasury to intermediate the cat swap. The team deployed Benfield's financial risk modeling tool ReMetrica to help assist international reinsurers and the capital markets to understand the CCRIF's catastrophe risks.

Aidan Pope, who heads the Latin America and Caribbean Team at Benfield, commented in a statement, “We were delighted to be appointed by the CCRIF, which is the world's first multicountry disaster insurance facility.

“This reinsurance program demonstrates Benfield's ability to place risks in both the traditional reinsurance and capital markets in order to deliver the best solution for the customer,” he said.

Grahame Chilton, chief executive officer of Benfield, said in a statement: “Benfield has a long history of structuring natural disaster programs for government schemes around the world. Our placement of the CCRIF's program highlights the ever-increasing importance for reinsurance intermediaries to be able to offer customers a seamless link between the capital markets and conventional reinsurance.”