Twelve Capital issues Dodeka IV private Catastrophe Bond
Zurich-based independent investment manager Twelve Capital has issued the private Cat Bond Dodeka IV, a USD28m zero-coupon Cat Bond that expires on 15 December 2014 and covers wind risk in the US.
It consists of two tranches: the first covers losses due to wind events in Florida and the second covers losses due to wind events in the US federal states around Gulf of Mexico.
The second tranche offers a particularly interesting risk within the Cat Bond universe, as there are few bonds focusing on the Gulf of Mexico States. The trigger of the transaction is based on the exceedance of predefined levels of market losses.
“We anticipate a sound pipeline of private Catastrophe Bonds, as there are plenty of insurance-risk opportunities that can be transferred into note format,” says Dr Roman Muraviev, director at Twelve Capital.
Twelve Capital continues to expand the Cat Bond universe by sourcing and packaging appealing risk which has not been offered by the Cat Bond market so far. This type of risk has so far been covered by Industry Loss Warranty (ILW) transactions in bond format only. The transformation method itself can support various risk and trigger types that would assist Twelve Capital to broaden its liquid investment offering.
“Now that the platform becomes more established, in future issuances we will consider converting more complex risks, including indemnity triggered covers, to Dodeka format, in order to continue to provide investors with access to the best quality peak and select diversifying risks,” says John Butler, partner and head of sourcing.
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