CCRIF Members to Benefit from World Bank’s First Cat Bond Issuance

July 10, 2014

The sixteen member countries of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has published an announcement, which points out that the organization “will benefit from the first ever catastrophe bond issued by the World Bank (International Bank for Reconstruction and Development).

“This $30 million transaction is the first of the World Bank’s newly created Capital-at-Risk Notes Program and will address earthquake and tropical cyclone risk in the CCRIF member countries,” the bulletin added.

CCRIF CEO Isaac Anthony commented: “CCRIF has previously been reliant on the traditional reinsurance market for its risk transfer but as the Facility seeks to grow and expand we felt it would be beneficial to diversify the sources of risk capital to include the capital markets. We are pleased to be part of this ground-breaking initiative of the Bank, and this will enable us to continue to offer our tropical cyclone and earthquake policies at the lowest possible price – an important consideration for our members in these times of economic and fiscal challenges.”

The CCRIF explained that the “new cat bond provides three years of annual aggregate protection for hurricanes and earthquakes affecting the 16 CCRIF member countries, using the same triggers and measurements as the Facility’s underlying parametric insurance model.”

"Cat bond investors benefit from exposure to new perils." Madelyn Antoncic, Vice President and Treasurer at the World Bank

Madelyn Antoncic, Vice President and Treasurer at the World Bank, explained: “With this first transaction under the Capital-at-Risk Notes Program, CCRIF benefits from access to the highly competitive prices offered by the cat bond market as well as from the efficiency of using this program. At the same time, cat bond investors benefit from exposure to new perils.”

The placement agent for the cat bond was Guy Carpenter (GC Securities) and the co-structuring agents for CCRIF were GC Securities and Munich Re. Swiss Re Capital Markets acted as advisor to the World Bank.

CCRIF Chairman, Milo Pearson, described the partnership as “another example of CCRIF’s continuing efforts to explore ways to help the countries in the Caribbean Region in building resilience to natural hazards.”

Source: Caribbean Catastrophe Risk Insurance Facility (CCRIF)

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