Grand Cayman, Cayman Islands, July 8, 2014 – The sixteen member countries of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) will benefit from the first ever catastrophe (“cat”) bond issued by the World Bank (International Bank for Reconstruction and Development). This US$30 million transaction is the first of the World Bank’s newly created Capital-at-Risk Notes Program and will address earthquake and tropical cyclone risk in the CCRIF member countries.
In expressing appreciation for the support provided to CCRIF by the World Bank and the confidence of the Bank in CCRIF, CCRIF CEO, Mr. Isaac Anthony, says, “CCRIF has previously been reliant on the traditional reinsurance market for its risk transfer but as the Facility seeks to grow and expand we felt it would be beneficial to diversify the sources of risk capital to include the capital markets. We are pleased to be part of this ground-breaking initiative of the Bank, and this will enable us to continue to offer our tropical cyclone and earthquake policies at the lowest possible price – an important consideration for our members in these times of economic and fiscal challenges.”
The new cat bond provides three years of annual aggregate protection for hurricanes and earthquakes affecting the 16 CCRIF member countries, using the same triggers and measurements as the Facility’s underlying parametric insurance model. Ms. Madelyn Antoncic, Vice President and Treasurer at the World Bank, asserted that, “With this first transaction under the Capital-at-Risk Notes Program, CCRIF benefits from access to the highly competitive prices offered by the cat bond market as well as from the efficiency of using this program. At the same time, cat bond investors benefit from exposure to new perils.”
The placement agent for the cat bond was Guy Carpenter (GC Securities) and the co-structuring agents for CCRIF were GC Securities and Munich Re. Swiss Re Capital Markets acted as advisor to the World Bank.
CCRIF Chairman, Mr. Milo Pearson, stated “this partnership is another example of CCRIF’s continuing efforts to explore ways to help the countries in the Caribbean Region in building resilience to natural hazards.”
About CCRIF: CCRIF is a not-for-profit risk pooling facility, owned, operated and registered in the Caribbean for Caribbean governments. It is designed to limit the financial impact of catastrophic hurricanes and earthquakes to Caribbean governments by quickly providing short-term liquidity when a parametric insurance policy is triggered. It is the world’s first regional fund utilising parametric insurance, giving Caribbean governments the unique opportunity to purchase earthquake and hurricane catastrophe coverage with lowest-possible pricing. CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalised through contributions to a multi-donor Trust Fund by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments. Since the inception of CCRIF in 2007, the Facility has made eight payouts totalling US$32,179,470 to seven member governments. All payouts were transferred to the respective governments within two weeks after each event.