UK mutual reinsurer Pool Re lifts terrorism ILS catastrophe bond to £100m

UK government-backed terrorism mutual reinsurer  Pool Re has placed its second insurance-linked securities (ILS) catastrophe bond through its special-purpose vehicle Baltic PCC, following the maturing of its original issuance from 2019.

The 2022 notes were issued in a 144A format to enhance liquidity.

The bond increased in size to £100 million from the £75 million issued in 2019, with the risk spread reduced to 5.5% compared to 5.9% under the 2019 issue.

GC Securities, a division of MMC Securities, acted as the structuring and placement agent for the three-year bond, which provides cover on an annual aggregate basis.

Pools Re said the deal brings new sources of capital to the terrorism risk market, returns additional premium to the private sector, and moves UK taxpayers even further from the risks it mutualises on their behalf.

Julian Enoizi (pictured), Pool Re chief executive said: “This notable achievement demonstrates the continuing innovation and determination of Pool Re in returning a larger part of the risk to the commercial markets and protecting the UK taxpayer consistent with our commitment given as part of our five year review. I am also particularly pleased that we can demonstrate again the collaborative spirit that exists between Pool Re and HM Treasury by supporting the journey towards enhancing the UK’s ILS framework. This will certainly strengthen our industry’s contribution to the UK economy and enhance London’s position in a global industry.”

Ian Coulman, Pool Re chief investment officer, added: “We were delighted by the significant interest and appetite from the markets, which has led to an increase in the overall number of investors compared to 2019.  This strong interest from the capital markets has led to a reduced spread and increased size of the bond and is important as we work to bring in new sources of capital to cover terrorism risk reinsurance.”

Economic secretary to the Treasury, John Glen, commented: “It’s great to see Pool Re successfully renew and increase its second Insurance Linked Securities for terrorism risk - ensuring taxpayers are further insulated from the financial costs of terrorist acts, with private markets committing to cover a greater share.”

David Priebe, Guy Carpenter chairman, said: “We are very pleased to support Pool Re on this important terrorism risk transfer transaction. It demonstrates growing expertise and flexibility of the ILS market with respect to a broader spectrum of risks.”

Cheng Li Yow, corporate partner at Clifford Chance added: “We were delighted to advise Pool Re again on its second ILS transaction through Baltic PCC Ltd. The deal is another strong endorsement of the UK’s ILS and PCC regime and closing it would not have been possible without the effective support of the PRA.”

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