Mercury Insurance, a California-headquartered property and casualty insurer, has secured $ 50.7 million in California wildfire reinsurance protection through a Randolph Re private catastrophe bond (series 2021-1) issued using Aon’s platform.
With that, the second Randolph Re show we saw, Aon’s White Rock Insurance (SAC) Ltd., acting on behalf of its separate Randolph Re 2020-1 account and as part of the Randolph Re program, issued $ 50.7 million. series 2021 dollars. -1 note.
The insurance-linked notes issued are due on July 6, 2022 and therefore probably represent a one-year fully guaranteed reinsurance arrangement that has been securitized for the ceding company, which as we said taught us to be Mercury Insurance.
In this case, we know that the real estate disaster risks covered by the reinsurance agreement relate to the California wildfires and we are told that in addition to the wildfires, this agreement will also cover losses due to the following fires. to an earthquake.
As a result, Mercury Insurance will benefit from a single year of $ 50.7 million in California wildfire reinsurance with this latest private catastrophe bond from Randolph Re, with protection offered on a claim trigger basis. and by event, we are told.
We understand that the Notes can attach to $ 450 million in losses and cover up to a depletion point of $ 850 million, so the Notes will cover almost 13% of that $ 400 million risk layer. .
The Notes are structured as a zero coupon deal, which means that the premium has likely been prepaid to investors as in a secured reinsurance arrangement. For this reason, we unfortunately have no information on coupons.
The $ 50.7 million of notes will have been sold to capital market investors, typically dedicated insurance-linked securities (ILS) funds or specialized asset managers with a dedicated categorical bond strategy.
Aon Securities acted as the sole structuring agent and bookrunner for the transaction.
The $ 50.7 million of notes issued under the Randolph Re program and the program itself have both been admitted to the Bermuda Stock Exchange (BSX) for listing.