ART Has New Cat Bond For U.S. South Coast Counties Risk

Allianz Risk Transfer Limited in Bermuda said it has successfully closed an innovative $120 million catastrophe bond to transfer the risk of U.S. hurricanes in southeastern coastal areas.

The company said the issue is part of an open-ended program and is the first series of notes issued by Blue Coast Ltd., a special purpose vehicle launched for the benefit of the Allianz Risk Transfer group (ART), a subsidiary of Munich-based Allianz Global Corporate & Specialty.

Chris Fischer Hirs, ART chief executive officer, said in a statement, "Cat bonds offer us a valuable tool to manage residual retained risk in our proprietary and client books."

ART said it is the first sponsor to utilize an innovative trigger structure which allocates industry losses at the county level along coastal areas of the southeastern United States.

Bill Guffey, head of ART's insurance-linked securities business, said in a statement: "By calibrating the trigger structure of the cat bond protection at a county level, rather than a state level, we improve our ability to hedge certain underlying U.S. hurricane risks and manage our balance sheet while minimizing and better managing our basis risk relative to other non-indemnity hedging alternatives."

This is Allianz's first cat bond transaction in 2008. Allianz sponsored two previous cat bond transactions in 2007--Blue Wings Ltd. (sponsored by Allianz Global Corporate & Specialty) and Blue Fin Ltd. (sponsored by the reinsurance division of Allianz).