Aon launches $45.5 million cat bond via Guernsey PCC

Aon launches $45.5 million cat bond via Guernsey PCC | Insurance Business Asia

Reinsurance

Aon launches $45.5 million cat bond via Guernsey PCC

It targets California wildfire risks for US property insurers

Reinsurance

By
Kenneth Araullo

A new $45.5 million private catastrophe bond, named Randolph Re, has been facilitated by Aon through its protected cell company, White Rock Insurance Company PCC Limited.

This bond issuance marks the first time a catastrophe bond has been structured using a Guernsey Protected Cell Company (PCC) format.

The 2024-1 series of the private catastrophe bond is a renewal of previous deals focused on reinsurance for wildfire risks. The coverage is provided on an indemnity trigger basis for a US property casualty insurer with significant wildfire exposure in California.

Carey Olsen’s Guernsey corporate team, led by partner Christopher Anderson and senior associate Arya Hashemi, advised on the bond issuance. Anderson highlighted the significance of the bond being issued through a Guernsey PCC, calling it a landmark moment for Guernsey’s insurance industry.

He noted that it demonstrates the advantages of structuring insurance-linked securities (ILS) transactions in Guernsey and Aon’s ability to extend its operations across various jurisdictions.

Rupert Pleasant (pictured above), chief executive of Guernsey Finance, commented on the growing importance of such financial instruments in addressing climate risks.

He pointed out that as climate change continues to escalate, Guernsey’s role as a center for innovative catastrophe bond solutions is expanding, referencing previous initiatives with the Danish Red Cross and the International Federation of Red Cross and Red Crescent Societies (IFRC).

Elsewhere in the market, Pool Re, the UK’s leading terrorism reinsurer, has awarded an insurance-linked securities (ILS) advisory contract to Aon Securities Limited and Howden Capital Markets and Advisory. The goal is to enhance protection for UK taxpayers.

Pool Re has previously utilized catastrophe bonds to secure reinsurance protection, successfully obtaining £175 million of ILS capacity through UK-domiciled special-purpose vehicle Baltic PCC Ltd. via cat bond issuances in 2019 and 2022.

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