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Pool Re Issues World's First Terrorism Catastrophe Bond

Terrorism Question Marks 480x377
February 28, 2019

Britain's state-backed terrorism reinsurer, Pool Re, recently placed a 3-year £75 million catastrophe bond that was issued through a special-purpose vehicle, Baltic PCC Ltd. 

Pool Re said the bond is the first-ever insurance-linked securities (ILS) contract to cover terrorism risk exclusively and only the second to be issued under the UK's new regulatory system for ILS.

The bond provides £75 million of retrocession protection in excess of Pool Re members' net loss of £500 million and provides aggregated cover on an annual basis.

Pool Re said this brings new sources of capital to the terrorism risk market, returns additional premium to the private sector, and moves UK taxpayers even further from the risks Pool Re mutualizes on their behalf.

Pool Re chief executive Julian Enoizi said, "[This placement] diversifies the funding of our retrocession programme, complementing the capital of traditional reinsurers to spread terrorism risk even more broadly. In addition … it helps us towards our ultimate goal of returning as much risk as possible to private markets."

Find out about captives as special purpose vehicles in Captives and the Management of Risk.




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