Chartis Obtains $575 Million of Reinsurance Coverage

Chartis today announced that it has entered into a reinsurance transaction with Compass Re, which will provide $575 million of protection to Chartis against U.S. hurricanes and earthquakes.

This represents a substantial increase from the $275 million of protection originally sought by Chartis. To fund its obligations to Chartis, Compass Re issued a catastrophe bond in three tranches – $75 million of Class 1 notes, $250 million of Class 2 notes and $250 million of Class 3 notes.

The transaction, closed on December 1, 2011, provides Chartis with fully collateralized coverage against losses from U.S. hurricanes and earthquakes on a per-occurrence basis (under a reinsurance agreement related to the Class 1 notes) and a second and subsequent event aggregate basis (under reinsurance agreements related to the Class 2 and Class 3 notes) through December 2014 using an index trigger with state-specific payment factors.

Risk analysis for the transaction is based on AIR Worldwide Corporation’s CATRADER Model Version 13.0.

The transaction follows Chartis’ two reinsurance transactions with Lodestone Re in 2010, which provided a total of $875 million of protection to Chartis, fully collateralized through catastrophe bonds issued by Lodestone Re, against U.S. hurricanes and earthquakes.

Source: Chartis