Investment giant Blackstone has successfully secured its targeted $250 million of multi-peril, named storm and earthquake, and indemnity based catastrophe insurance protection for its real estate funds, through the new Wrigley Re Ltd. (Series 2023-1) cat bond transaction.
Now closed today, this new Wrigley Re 2023-1 catastrophe bond features a $100 million per-occurrence tranche of notes that will provide Blackstone’s real estate investment strategies with named storm protection, across the US and Canada, as well as annual aggregate earthquake protection for all US states except California and Canada.
The Wrigley Re 2023-1 catastrophe bond also features a $150 million tranche of annual aggregate notes that will provide Blackstone’s real estate strategy with California-only earthquake protection.
Both tranches now provide Blackstone with indemnity catastrophe insurance protection across a roughly three-year term to protect the real estate investment portfolios it manages from major natural disaster events.
The successful placement of the second cat bond for Blackstone’s real estate funds saw the investment giant switching from a parametric coverage approach, which it had adopted for the first.
Recall that the $50 million Wrigley Re Ltd. (Series 2021-1) cat bond deal provided Blackstone with protection against losses from California earthquakes on a parametric trigger and per-occurrence basis, across a roughly a three-year term to the end of June 2024.
So, with the new Wrigley Re 2023-1 cat bond now complete and this much larger coverage secured, Blackstone currently has $300 million of cat bond protection in-force, from the two deals.
As a reminder, the two tranches of this new $250 million Wrigley Re Series 2023-1 catastrophe bond notes provide capital markets backed collateralized retrocessional reinsurance protection to global reinsurer Hannover Re, who fronts the capital market investors for Blackstone.
The coverage is then passed on through reinsurance agreements between Hannover Re and the Gryphon Mutual Property Americas IC real estate captive insurer owned by Blackstone, which in turn passes the coverage on to real estate funds managed by the investment giant.
At closing, the $100 million Class A tranche of notes, that provide per-occurrence named storm protection across the US and Canada, as well as annual aggregate earthquake protection for all US states except California and Canada, and have an initial expected loss of 0.56% priced at the low-end of spread guidance at 6.5%
The $150 million Class B tranche of notes, that provide annual aggregate California only earthquake protection, also priced for a spread at the low-end of initial guidance at 7%.
Blackstone is quite a unique case, in terms of a major investment manager with a sophisticated approach to insurance and risk management.
There are few others with its level of resource and sophistication, or that have recognised the need to have more disaster insurance protection in place and to tap third-party capacity sources to achieve that.
But, we expect that over-time, as managers increasingly look to secure their portfolios against natural disaster, weather and climate-related events, that we will see more asset managers looking to put risk transfer behind their portfolios of assets that are exposed to such significant catastrophic events.
You can read all about this Wrigley Re Ltd. (Series 2023-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.
