DEAL: Singapore’s first catastrophe bond

Author: Karry Lai | Published: 10 Apr 2019

Insurance Group Australia (IAG) has sponsored an AUD$75 million ($53 million) catastrophe bond in Singapore, the first in the jurisdiction.

The Orchard ILS deal is sponsored by IAG as part of its 2019 catastrophe aggregate reinsurance protection. Orchard ILS is providing IAG with AUD$75 million of annual aggregate cover over a three-year term by issuing catastrophe bond notes which have been sold to ILS investors. The proceeds are used to collateralise part of IAG’s catastrophe aggregate reinsurance programme.

As it’s the first of its kind in Singapore, the challenge was to work out the procedure to set up a special purpose reinsurance vehicle (SPRV) efficiently as the structure has not been tested before. But with this experience, Singapore regulators aim to ease the...