NU Online News Service, May 14, 1:40 p.m. EDT
Worldwide property and casualty insurer Chartis has purchased $425 million in catastrophe bond protection against U.S. hurricanes and earthquakes, the company said.
Chartis president and Chief Executive Officer Kristian P. Moor said the transaction will help provide the company with increased financial flexibility.
The reinsurance transaction is with Lodestone Re, a special purpose insurer incorporated in Bermuda.
Chartis, a wholly-owned subsidiary of American International Group (AIG), said the $425 million in cat bond protection "represents a substantial increase from the $250 million of protection originally sought by Chartis."
The transaction closed on May 12, the company said, noting that the transaction, "provides Chartis with fully collateralized coverage against losses from U.S. hurricanes and earthquakes on a per-occurrence basis until May 2013 using an index trigger with state-specific payment factors."
To fund its obligations in the deal, Chartis said Lodestone Re issued a catastrophe bond in $175 million of Class A notes and $250 million of Class B notes.
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