May 7, 2010 / 5:21 PM / 10 years ago

Allianz launches third offering in U.S. catastrophe bond

LONDON, May 7 (Reuters) - In a busy run up to the start of the U.S. wind season, insurer Allianz has launched its third offering in its $150 million U.S. hurricane and earthquake catastrophe bond programme, the seventh bond to be launched before June 1.

Rating agency Standard & Poor’s (S&P) has assigned a B- credit rating to the $100 million Class A notes, and a BB rating to the $50 million Class B notes of Blue Fin Ltd.

Blue Fin is a Cayman Islands exempted company and sponsored by Allianz Argos 14 GmbH.

Catastrophe bonds are used by the insurance industry to transfer extreme risks, such as those for earthquakes or hurricanes, to financial market investors, who receive a handsome yield in return for agreeing to cover damages they consider unlikely.

Allianz Argos 14 GmbH, a wholly-owned subsidiary of Allianz SE (ALVG.DE) and incorporated as a limited liability company, is the counterparty whose obligations under the counterparty contract are guaranteed by Allianz SE, said S&P in its presale report.

“Allianz SE is a global multi-line insurance provider. It is proposing to enter into this transaction to receive a multi-year source of catastrophe protection capacity for certain U.S. hurricane and earthquake events,” said S&P.

Swiss Re Capital Markets & Aon Benfield Securities Inc. will help arrange the bond.

The three-year bond will use U.S. money market fund yields for its collateral structure, and the risk analysis was carried out by AIR Worldwide Corp.

Blue Fin series 3 covers U.S. hurricanes in 31 U.S. states including Hawaii and the District of Columbia, and earthquakes occurring in the continental U.S. as well as Alaska and Hawaii, said S&P.


Four cat bonds have closed in 2010 so far, each contributing to a total of $800 million in issuance. First time issuer, Assurant’s Ibis Re II, closed at $150 million last week, following The Hartford’s $180 million Foundation Re III, Swiss Re’s, $120 million Successor X and State Farm’s $350 million Merna Re II.

Currently four more cat bonds are being marketed to investors. On April 19 S&P assigned its ‘BB-‘ rating to Munich Re’s U.S. hurricane catastrophe bond Johnston Re Ltd, while Chartis, formerly known as AIU Holdings, is also marketing its first catastrophe bond issuance for its National Union Fire Insurance subsidiary in the U.S.

Nationwide Mutual Insurance Co launched its U.S. hurricane and earthquake, Caelus Re earlier this week with a BB+ rating from S&P. The presale report for USAA’s 14th catastrophe bond Residential Re bond is expected to the published on Monday.

(For a complete catalogue of catastrophe bond presales reports and ratings criteria from S&P click on: here)

(Click here to join the Thomson Reuters Insurance Linked Securities Community for more news and analysis: here)

Editing by Ron Askew

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