Flagstone Re Places $210 Million Cat Bond Using RMS Paradex Indices

December 29, 2010

Flagstone Reassurance Suisse SA and Risk Management Solutions have announced the successful placement of $210 million of multi-peril Montana Re 2010-1 Notes, the second offering sponsored through the Montana Re shelf program.

RMS noted that it had “conducted the expert risk analysis for the three tranches, which provide Flagstone Re with coverage against U.S. and Cayman Island hurricane, U.S. earthquake, Japan typhoon and earthquake, and Europe windstorm through December 31, 2013.”

David Flitman, chief actuary at Flagstone Re, commented: “We designed this transaction to be as investor-friendly as possible. The Paradex trigger reduces investors’ exposure to non-modeled risks, and the quick settlement guaranteed by Paradex allows us to shorten the potential extension period to 60 days.”

Peter Nakada, managing director of RiskMarkets at RMS, added: “We are delighted to help Flagstone Re bring this transaction to market and, in the process, see the first five-peril Paradex deal. Investor demand for this form of coverage was again very strong, and the transaction now brings the total volume of Paradex deals to one billion dollars.”

Additionally, RMS worked with Flagstone Re to craft customized parametric “cat-in-a-circle” cover for the Cayman Islands, making this the first time this risk has been securitized by RMS.

Sources: Risk Management Solutions and Flagstone Re

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