NEW YORK--(BUSINESS WIRE)--GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of the Series 2015-1 Notes, with notional principal of USD 275,000,000, through the newly formed catastrophe bond shelf program, PennUnion Re Ltd., to benefit Passenger Railroad Insurance, Ltd. (“PRIL”), a Bermuda licensed and domiciled insurance company and wholly-owned subsidiary of the National Railroad Passenger Corporation (“Amtrak”). The 2015-1 Notes represent the first time Amtrak has obtained capital markets-based reinsurance for storm surge and wind from Named Storms and earthquake protection.
The Series 2015-1 Notes provide per occurrence, parametric triggered protection from storm surge and wind resulting from Named Storms as well as earthquakes affecting the Northeast region of the U.S. for a period of approximately 3.17 years. The transaction is triggered based on key intensity measurements of the physical parameters for each respective peril captured at specified measurement locations. Depending upon the peril, the measurements are taken from both inland and offshore locations ranging from the Washington, D.C. to Providence, RI regions.
Storm surge water height measurements are captured at seven tidal gauge stations in the Long Island Sound, East River, Lower New York Bay and Delaware River. Wind measurements are captured and interpolated for 60 ZIP codes along Amtrak’s Northeast Corridor (“NEC”) railways from Washington, D.C. to near Providence, RI. Earthquake intensity is interpolated to 21 ZIP codes within the states of Delaware, New Jersey, New York, Pennsylvania and Rhode Island.
GC Securities served as joint structuring agent and joint bookrunner for the Series 2015-1 Notes. Risk Management Solutions, Inc. served as expertizing modeling firm and calculation agent for the Series 2015-1 Notes.
RISK PROFILE
|
Series 2015-1 |
Size | S&P Rating |
Expected |
Coupon | ||||
| Class A Notes | $275,000,000 | BB- sf | December 7, 2018 |
Permitted |
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QUOTES
Gerald Sokol, Chief Financial Officer, National Railroad Passenger Corporation
“This is the first time Amtrak has used the capital markets to broaden our base of insurance coverage. The catastrophe bond market provides us with a means to diversify our sources of insurance in a cost effective manner.”
David Priebe, Vice Chairman of Guy Carpenter
“The successful execution of PennUnion Re Ltd. on behalf of Amtrak continues to demonstrate GC Securities’ position as the global market leader for capital markets-based insurance risk transfer solutions not only for (re)insurance companies but also for corporate and quasi-governmental entities with critical infrastructure exposure. Marsh & McLennan’s continued commitment to bringing alternative capital solutions for the benefit of our global clients highlight the breadth of the GC Securities platform for the benefit of all its operating companies' clients.”
Cory Anger, Global Head of ILS Structuring, GC Securities
“We are honored to be chosen to support Amtrak in development of their risk transfer program and are delighted to demonstrate the willingness of capital markets investors to provide attractive pricing and capacity. Amtrak’s use of catastrophe bond-based protection for its Northeast Corridor exposure represents further strides in the ILS market by being the first catastrophe bond ultimately benefiting a corporate that provides multi-peril coverage. The novel and dynamic trigger mechanisms based on physical observations for each of the perils covered (for example, storm surge heights for Named Storms, wind speeds from Named Storms, and earthquake intensities) were tailored to specific losses to Amtrak’s infrastructure and are fairly unique in the current ILS landscape. GC Securities is pleased to have yet again brought this type of structure to the market and demonstrates the applicability of ILS structures to public sector risks including on the federal level.”
Chi Hum, Global Head of ILS Distribution, GC Securities
“We are pleased at the overwhelming support and oversubscribed offering from the more than 25 participating capital market investors or the PennUnion Re Series 2015-1 Notes. This strong support allowed the transaction size to be increased by 37.5% from the initial offering size while at the same time pricing at the lowest end of price guidance. Capital markets investors continue to offer support to new entrants into the catastrophe bond space, including, not only for diversifying perils but also for unique triggers structures and sponsor types. We are pleased the investor community is supportive of transactions with thoughtful structural features suited for a sponsor such as Amtrak.”
About Guy Carpenter
Guy Carpenter & Company, LLC is a global leader in providing risk and reinsurance intermediary services. With over 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers capital market solutions* for clients across the globe. The firm’s full breadth of services includes line-of-business expertise in agriculture; aviation; casualty clash; construction and engineering; cyber solutions; excess and umbrella; excess and surplus lines; healthcare & life; marine and energy; mutual insurance companies; political risk and trade credit; professional liability; property; public sector; retrocessional reinsurance; surety; terrorism and workers compensation. GC Fac® is Guy Carpenter’s dedicated global facultative reinsurance unit that provides placement strategies, timely market access and centralized management of facultative reinsurance solutions. In addition, GC Analytics®** utilizes industry-leading quantitative skills and modelling tools that optimize the reinsurance decision-making process and help make the firm’s clients more successful. For more information, visit www.guycarp.com and follow Guy Carpenter on Twitter @GuyCarpenter.
Guy Carpenter is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With annual revenue of $13 billion, Marsh & McLennan’s 57,000 colleagues worldwide provide analysis, advice, and transactional capabilities to clients in more than 130 countries through: Marsh, a leader in insurance broking and risk management; Mercer, a leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a leader in management consulting. Marsh & McLennan is committed to being a responsible corporate citizen and making a positive impact in the communities in which it operates. Visit www.mmc.com for more information.
*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.