Prologis targets cat bonds for earthquake insurance with Logistics Re

Prologis targets cat bonds for earthquake insurance with Logistics Re

Logistics, warehousing and supply-chain concentrated genuine estate owner and financier Prologis, Inc. has turned to the disaster bond market to source earthquake insurance coverage security, with the company set to be the beneficiary of a $95 million or bigger Logistics Re Ltd. (Series 2021-1) feline bond issuance.Prologis is the most current corporate sponsor of a catastrophe bond to come to light and as a very first time entrant to the insurance-linked securities (ILS) market, the market will be thrilled to see a new class of business targeting insurance coverage protection from the capital markets.
Prologis runs as a real estate financial investment trust, investing and owning in industrial real estate, mostly connected to the warehousing, logistics and supply-chain sectors and with a United States focus.
Prologis also has a threat concentration in California, we comprehend, with approximately a quarter of the insured limit that will be covered by this Logistics Re catastrophe bond originating from that state and provided the elevated earthquake risk in California, the state contributes 95% of the preliminary anticipated loss to this feline bond.
The business has had a special function insurance provider (SPI) called Logistics Re Ltd. registered in Bermuda for the purposes of providing catastrophe bond programs and notes.
The protection from this very first feline bond will be cascaded down from the Logistics Re Ltd. SPI, by means of worldwide reinsurance firm Hannover Re, through Prologis captive insurer Solution Insurance Ltd. and on to Prologis itself.
Thats a normal cascading method that is frequently utilized to enable a corporate sponsor to more directly and quickly gain access to the capital markets for insurance coverage security.
Logistics Re Ltd. will look for to issue a single $95 million Class A tranche of Series 2021-1 catastrophe bond notes.
Those notes will be offered to cat bond financiers and the earnings used to collateralize retrocessional reinsurance contracts between the SPI and Hannover Re.
Hannover Re will then provide reinsurance to the captive insurer, Solution Insurance Ltd. which will in turn insure Prologis, Inc
. The $95 countless Class A notes will offer Prologis with a three-year source of United States earthquake insurance coverage defense, covering the 50 states (with California the peak direct exposure) on an indemnity and per-occurrence basis, were told.
The Class A notes will attach at $350 million of losses to Prologis insurance coverage tower and cover a percentage of losses up to $550 million, we understand.
That gives the notes an initial attachment probability of 1.559%, an initial anticipated loss of 1.094% and they are being offered to cat bond financiers with discount coupon guidance in a variety from 3% to 3.5%, sources stated.
We understand the disaster bond released by Logistics Re Ltd. will sit rather high in Prologis insurance tower and that the business is seeking to the capital markets to both extend its coverage and due to the fact that rates and conditions are deemed to be attractive for protecting quake defense at this time.
Its motivating to see another business sponsor coming to market, especially as Prologis comes from a different market sector to other recent business cat bond beneficiaries.
This must assist to expand awareness of the disaster bond amongst large corporates and owners or holders of possession portfolios, which could in time promote more of these kinds of sponsors to come to the ILS market.
You can read all about the Logistics Re Ltd. (Series 2021-1) catastrophe bond and every other feline bond issuance in the Artemis Deal Directory.

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