Swiss Re Capital Markets structures and places USD 350 million catastrophe bond for Frontline Insurance

10 July 2018Swiss Re

Swiss Re Capital Markets has successfully structured and placed the issuance of USD 350 million of insurance-linked securities by Frontline Re Ltd on behalf of Frontline Insurance ("Frontline"). The transaction is Frontline's debut catastrophe bond and covers named storms in Alabama, Florida, North Carolina and South Carolina.

Swiss Re Capital Markets underwrote the transaction via two classes of principal at-risk variable rate notes issued by Frontline Re Ltd., a Bermuda exempted company licensed and registered as a special purpose insurer under the Bermuda Insurance Act 1978 and related regulations, each as amended.

The USD 350 million Frontline Re Ltd. transaction represents the largest cat bond of a Florida based (non-government entity) insurance company. The USD 250 million Class A notes and USD 100 million Class B notes have a four-year risk period starting July 1, 2018 and provide protection against named storms. The transaction features an event adjusted attachment level, which for the first time in the cat bond market is based on the event size rank of a named storm within an annual risk period.

Jean-Louis Monnier, Co-Head of ILS at Swiss Re Capital Markets, comments: "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. The innovative cat bond combines structural mechanics of the Florida Hurricane Catastrophe Fund ("FHCF") as well as features of Frontline's private reinsurance coverage and therefore seamlessly integrates with Frontline's reinsurance program."

Swiss Re Capital Markets acted as sole structuring agent and sole bookrunner for the transaction.

The Frontline Re Ltd. notes were sold pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended (the "Securities Act") and have not been registered under the Securities Act or any state securities laws; they may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject, to the registration requirements of the Securities Act and applicable state securities laws.

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