Guernsey: Ground Breaking Insurance Bond Listing In Guernsey
Last Updated: 8 November 2012

Bedell Cristin's Guernsey office has completed an innovative listing of insurance risk on the Channel Islands Stock Exchange.

It is the first bond relating to catastrophe reinsurance risk on the Exchange and the first private catastrophe bond listed on any exchange worldwide.

The 'principal at risk' US $52.5 million notes are written with a reinsurance treaty from the California Earthquake Authority as their underlying asset on behalf of Solidum Re ICC Limited's Guernsey incorporated cell, Solidum Re Eiger IC Limited.

Mark Helyar, Managing Partner of Bedell Cristin Guernsey, who completed the listing, commented: "Despite a gloomy growth outlook in some sectors we are delighted so soon after our recent ground breaking transactions in the credit insurance market to have created another very important and ground breaking first for Guernsey. This is an excellent example of the application of Bedell's highly specialist technical expertise in the capital markets and reinsurance sectors helping to drive continued innovation and growth for our clients."

Tamara Menteshvili, Chief Executive of the CISX, commented: "This is an exciting and important development for the Channel Islands Stock Exchange. Guernsey already has a leading and mature captive sector in the European time zone, so the listing of high quality specialist reinsurance securities of this type helps to broaden the scope of the CISX offering as well as creating new business opportunities for the insurance sector."

Cedric Edmonds, Partner at Solidum Partners and Director of Solidum Re Eiger IC Limited, said: "Solidum Partners chose Guernsey as a jurisdiction for its cell reinsurance company and private CAT bond platform due to the Incorporated Cell Company (ICC) legislation and the quality and 'can do' attitude of the service providers when faced with something new.

"Solidum was the first entity to issue private cat bonds and to date the only entity to have their private placement cat-linked notes traded. The current listing on the CISX is the next step to broader dissemination and acceptance. To date the Solidum vehicles have issued in excess of USD 100m of notes and we look forward to growing this number in the future."

John Rowson, Executive Director of Aon Insurance Managers (Guernsey) Limited and a Director of Solidum Re Eiger IC Limited, was pleased to be involved in this local development of the burgeoning ILS industry.

"Guernsey's proximity to London, robust regulation and secure credit rating give the jurisdiction huge opportunities to grow in this space where innovation and experienced legal firms are essential, having Mark Helyar involved has been critical to a successful and smooth listing," he said.

Mark Helyar added: "Guernsey and the CISX are ideally placed to support this business in the European time zone because of the specialist insurance and professional sectors able to provide a high quality, transparent marketplace for securitising catastrophe risk in a well regulated and respected jurisdiction.

"Securitising insurance risk in this highly technical and specialised way allows investors to assume the risk without all the costs and potential problems (management, investment, market, etc.) that they would need to assume if they invested in reinsurer equity or the (few) reinsurer loan notes available on the market.

"Catastrophe event risk is not correlated in any way to the performance of the financial markets and is therefore a pure diversifier to investors' portfolios of econometric risk and, as was proven in 2008, tend to keep their value when financial markets collapse."

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