Willis Capital Markets and Advisory (WCMA) has structured and placed a $250 million catastrophe bond transaction for State Compensation Insurance Fund, California’s largest provider of workers’ compensation insurance.
Golden State Re II represents State Fund’s second time accessing catastrophe bond capacity.
The transaction, which closed on 16 September, provides State Fund with $250 million of fully collateralised protection for workers’ compensation against California earthquakes over a term of slightly over four years and three months.
The renewal transaction features a modelled loss trigger on a per occurrence basis, similar to the one used by State Fund in its first catastrophe bond transaction in 2011.
Investors were eager to support this transaction as it upsized from $150 million to $250 million while settling in at the bottom end of the initial pricing guidance of 2.20 percent to 2.70 percent.
The transaction will replace a $200 million transaction as State Fund chose to increase the capacity it sources from the capital markets.
Tony Ursano, CEO of WCMA, said: “The pricing that State Fund was able to obtain on Golden State Re II highlights the rapidly changing dynamics in the [insurance-linked securities] landscape over the last three years.”
“For a similar layer that was placed in 2011, State Fund was able to obtain 25 percent more capacity while pricing dropped more than 40 percent.”
“We expect investors to continue to welcome well-structured deals as capacity continues to seek ways to access insurance risk.”
The transaction marks WCMA’s seventh successful cat bond placement of 2014 and fifth as sole manager.
