Swiss Re places $350m cat bond for Frontline Insurance

Swiss Re has structure and placed a $350m debut catastrophe bond for Florida based Frontline Insurance through its Bermuda-based special purpose insurer Frontline Re. The bond covers named storms in Alabama Florida, North Carolina and South Carolina. It will consist of $250m in class A notes and $100m in class B notes with a four year risk period beginning from July 1 this year and features an event adjusted attachment level. It is the largest catastrophe bond completed by a non-government backed Floridian insurer and also the first time that such a bond is based on the event size rank of a named storm within an annual risk period. It is the largest transaction completed by any Florida insurer since 2014. "Swiss Re is pleased to provide support to Frontline on its debut catastrophe bond issuance. The transaction was well received by investors, and is the largest for a Florida insurer since 2014,” said Jean-Louis Monnier, co-head of ILS at Swiss Re Capital Markets. The catastrophe bond combines some of the structural mechanics of the Florida Catastrophe Hurricane Fund (FCHF) with the elements of Frontline's own private reinsurance coverage, according to Monnier. The FHCF itself is designed to reimburse insurers for a portion of catastrophic hurricane losses, and it has secured reinsurance coverage through the use of catastrophe bonds. It first made that move at the beginning of 2015 when it secured $1bn of reinsurance at an attachment point of $12.5bn.

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