Travelers launches $500m cat bond for northeast hurricanes
Travelers raised $500m selling catastrophe bonds, the biggest this year, Bloomberg reports.
Catastrophe-bond issuance in 2009 may reach $3.5bn, exceeding the $2.7bn placed in 2008, said Paul Schultz, president of Aon Benfield Securities.
Travelers’ Longpoint Re bonds covers hurricane damage in the US Northeast. Travelers offered to pay 5.4 percentage points above the yield on three-month US Treasury bills. The funds go to the insurer if hurricanes in the region cause more than $2.25bn in losses. Travelers arranged its original $500m Longpoint Re bond in 2007.
The coverage is split into two bonds of $250m each, which provide protection for events occurring on or before 18 December 2012, and on or before 18 December 2013.
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