London – BNP Paribas, as co-manager, has arranged $247.5m of catastrophe bonds for Foundation Re II Ltd., a Cayman Island exempted company. Foundation Re II Ltd issued the bonds to finance a new, multi-year reinsurance cover for Hartford Fire Insurance Company (HFIC), a subsidiary of HFSG. HFSG is one of the United States’ largest financial services and insurance companies. RMS Inc. modelled the natural catastrophe risk.
The bonds were issued in two Classes. Class A will generate up to $180m in the event of severe United States hurricanes during the period to 17th November, 2010. Class G will generate up to $67.5m in the annual aggregate for hurricanes, earthquakes and tornado/hailstorms in the United States during the two calendar years to 31st December, 2008. The bonds were rated BB+ (Class A) and B (Class G) by Standard & Poor’s.
The performance of the bonds is dependent on the impact of Property Claim Services’ (PCS) Insured Industry Property Loss Estimates on a customised index.
BNP Paribas was also the Total Return Swap provider for Foundation Re II Ltd. in connection with the collateral assets. Goldman Sachs was the lead manager and sole bookrunner.
Mark Azzopardi, Head of Insurance & Pensions within Fixed Income at BNP
Paribas said: “This is the third successful series of catastrophe bond transactions which we have closed for Foundation Re companies in the last two years, taking the total capacity in force to $600m. This series of transactions demonstrates how significant, long-term, fixed-price capacity can be sourced effectively from the capital markets.”
About BNP Paribas
BNP Paribas (www.bnpparibas.com) is a European leader in banking and financial services, and ranks among the world’s top 15 banks by market capitalization and total assets. It has more than 140 000 employees, 110 000 of whom are based in Europe. The group occupies leading positions in three significant fields of activity: Corporate and Investment Banking, Asset Management & Services and Retail Banking. It is present in 85 countries and has a strong presence in all the key financial centres. Present throughout Europe, in all its business lines, France and Italy are its two domestic markets in retail banking. BNP Paribas enjoys a significant and growing presence in the United States and leading positions in Asia and in emerging markets.
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Celeste Matta-Brown, BNP Paribas Corporate Communications +44 20 7595 4653
Shani Halstead, BNP Paribas Corporate Comminications +44 20 7595 2436