Innovative Catastrophe Bond Issued by Fidelis Insurance Group
Fidelis Insurance Group Unveils New Catastrophe Bond
Fidelis Insurance Holdings Limited (NYSE: FIHL), a prominent global specialty insurer, has recently made headlines with the successful closure of a new catastrophe bond. This milestone involves the issuance of the Series 2024-2 Class A, B, and C Principal-at-Risk Variable Rate Notes, collectively referred to as the Series 2024-2 Notes. The entire process is facilitated through their Herbie Re Ltd. program, aptly known as Herbie Re.
Significance of the New Series 2024-2 Notes
This release marks the sixth series of catastrophe bonds from Herbie Re. Through this latest issuance, Fidelis Insurance Group secures approximately $375 million in collateralized reinsurance protection. This financial cushion will be vital, as the Series 2024-2 Notes will be attuned to losses deriving from Named Storm and Earthquake Covered Events throughout regions like the continental United States, Puerto Rico, and the U.S. Virgin Islands, as evaluated on an annual aggregate basis.
Protection Duration and Coverage
The Class A and B Notes are anticipated to provide roughly four years of protective coverage, with a Risk Period concluding on December 31, 2028. In contrast, the Class C Notes are designed for about two years of coverage, expected to wrap up on December 31, 2026. This structured approach underlines the company's foresight in safeguarding against potential disaster-related claims.
Insights from Company Executives
Ian Houston, the Chief Underwriting Officer at Fidelis Insurance Group, expressed his satisfaction with the successful completion of this latest issuance within the Herbie Re Catastrophe Bond program. He noted, "These bonds are an integral aspect of our strategic capital management alongside our risk mitigation strategies." He emphasized the significance of enhancing their reinsurance strategy through various methods including quota share, excess of loss, and industry loss warranties (ILWs).
Achievement in Market Positioning
Richard Coulson, the Deputy Group Chief Underwriting Officer at The Fidelis Partnership, also shared his perspectives on the event. He remarked, "We’re proud to have effectively placed the latest series in collaboration with Ian Houston and the Fidelis team. This tranche signifies an innovative tool for the Fidelis Insurance Group, especially as we seize opportunities across catastrophe-exposed sectors looking towards 2025 and beyond.”
The Role of Aon in the Process
The pricing of this catastrophe bond took place on December 17, 2024, with the closure following on December 27, 2024. Aon played a pivotal role as the Sole Structuring Agent and Bookrunner during these transactions. Meanwhile, Willkie Farr & Gallagher (UK) LLP served as legal counsel for both Fidelis Insurance Group and Herbie Re throughout this structured financial endeavor.
About Fidelis Insurance Group
Fidelis Insurance Group stands out as a global specialty insurer, committed to forging strategic partnerships that enable them to deliver innovative and tailored insurance solutions. Their operational focus spans three key segments: Specialty, Bespoke, and Reinsurance. This diversification positions them to adeptly navigate evolving (re)insurance landscapes, offering a dynamic approach that shifts with market cycles while aiming for superior underwriting returns.
Global Presence and Ratings
Headquartered in Bermuda, Fidelis operates internationally with offices in Ireland and the United Kingdom. Financially, their operating companies boast strong ratings, including an A from AM Best, A- from S&P, and A3 from Moody’s, underscoring the company's capacity to meet its customers' needs effectively.
About The Fidelis Partnership
The Fidelis Partnership is recognized as a preeminent privately-owned, Bermuda-based Managing General Underwriter. Its subsidiaries engage globally in underwriting property-focused bespoke and specialty insurance and reinsurance products. This partnership, distinct in ownership and management from Fidelis Insurance Group, is instrumental in areas like ceded reinsurance, claims management, exposure analysis, and comprehensive portfolio analytics. The management also sponsors specialized Managing General Agents (MGAs) through its Pine Walk platform.
Frequently Asked Questions
What is the purpose of the catastrophe bond issued by Fidelis?
The catastrophe bond aims to provide $375 million of collateralized reinsurance protection against severe weather events and earthquakes.
Who were the key players involved in the issuance of the bond?
Key players included Ian Houston, Richard Coulson, and Aon, which acted as Sole Structuring Agent and Bookrunner.
How does the issuance impact the company's reinsurance strategy?
This issuance enhances Fidelis Insurance Group’s reinsurance strategy, supporting their overall risk management and financial stability.
What is the duration of the coverage provided by the new notes?
The coverage duration varies, with Class A and B Notes offering approximately four years, while Class C Notes provide roughly two years of protection.
Where is Fidelis Insurance Group headquartered?
Fidelis Insurance Group is headquartered in Bermuda with offices located in Ireland and the UK.
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