New European Cat Bond Uses RMS Paradex for Risk Analysis

Risk Management Solutions announced that a $200 million Multi-Peril Securitization has become the first catastrophe bond issued using RMS Paradex Europe WiNdstorm index for risk analysis.

RMS said it has “performed the risk analysis for a catastrophe bond covering four perils across three regions. The transaction is the first to use RMS’ newly launched standardized parametric index for European windstorm.”

Topiary Capital Ltd., a Cayman Islands special purpose vehicle (SPV), issued the securities, which “provide $200 million of collateralized cover for Platinum Underwriters Bermuda over three years,” said RMS. “The transaction offers second-event protection against insured losses from U.S. windstorm and earthquake, Japanese earthquake, and European windstorm.

“The U.S. region triggers are based on estimates from Property Claims Services (PCS) following a catastrophe, while the bond triggers for Japanese earthquake and European windstorm are parametric. The European windstorm trigger is based on the Paradex Europe Windstorm Index, launched earlier this year, which combines wind speed measurements in specific locations with RMS industry exposure data to calculate insured loss estimates.”

Ben Brookes, director of RiskMarkets at RMS, noted that the “deal demonstrates that the appetite to transfer risk to the capital markets remains strong, even in soft market conditions. While indemnity deals continue to attract attention, especially among specialist investors, we are seeing an increased interest in transactions based on parametric triggers, due to their relative simplicity and transparency. Paradex Europe Windstorm seeks to facilitate the growth of this market even further.”

Source: Risk Management Solutions –