QBE targets $250m Bridge Street Re 2025-1 catastrophe bond

QBE Insurance Group, the Australia headquartered global insurance and reinsurance company, is back in the catastrophe bond market for the first time since 2013, with a target to secure $250 million or more in retrocession from a Bridge Street Re Ltd. (Series 2025-1) issuance, Artemis has learned.

QBE was last in the catastrophe bond market in late 2013, when it secured $250 million of US and Australian multi-peril protection from the VenTerra Re Ltd. (Series 2013-1) deal.

Now, the company is back and this time leveraging two new Bermuda Class 4 entities it has recently set up to add efficiency to the way it organises its reinsurance offerings and balance-sheet needs, QBE Capital Ltd. and QBE Capital (Global) Ltd., which are the two cedents to this new Bridge Street Re cat bond.

Bridge Street Re Ltd. has been established to be a special purpose insurer (SPI) in Bermuda and it is looking to issue a single tranche of Series 2025-1 Class A notes, that will be sold to investors and the proceeds used to collateralize the underlying retrocessional reinsurance arrangements with the two QBE Capital entities, we understand.

The targeted Bridge Street Re 2025-1 Class A notes are designed to provide QBE with a multi-year source of protection, on an industry-loss trigger and annual aggregate basis across a roughly three-year term, from issuance to the end of 2027, we are told.

The cat bond notes will provide QBE territory-weighted retro reinsurance against major industry loss events caused by named storms and earthquakes throughout the United States, Puerto Rico, DC, the US Virgin Islands and Canada, over the risk period.

Being annual aggregate in nature, sources said a franchise deductible will be in place for both of the covered perils, set at $10 billion per industry-loss event, with PCS the reporting agent.

The $250 million of Class A notes Bridge Street Re Ltd. is set to issue will have an initial attachment probability of 2.03%, an initial expected loss of 1.29% and are being offered to cat bond investors with price guidance in a range from 4.25% to 5%, it is said.

It’s encouraging to see QBE return to the catastrophe bond market after more than a decade without an issuance from the company.

It shows another large re/insurer recognising the value of diversifying its sources of reinsurance with the support of capital markets, while also indicating that the cat bond market is effectively providing capacity for well-structured aggregate protection.

You can read all about this new Bridge Street Re Ltd. (Series 2025-1) catastrophe bond transaction and every other cat bond ever issued in our Artemis Deal Directory.