To offer Flagstone protection on its reinsurance portfolio through separate tranches
Flagstone Reinsurance has announced that Flagstone Réassurance Suisse has purchased three years of collateralised retrocessional coverage from Montana Re.
Montana Re offers Flagstone protection on its reinsurance portfolio through two separate tranches, utilizing a PCS index trigger with state and peril-specific personal and commercial payout factors. It has issued USD $100m of Series 2009–1, Class A Principal-at-Risk Variable Rate Notes and $75m of Series 2009-1, and Class B Principal-at-Risk variable rate notes due December 7, 2012 to collateralise its obligations under the retrocession agreements.
David Brown, CEO of Flagstone, said: “We are very pleased with the outcome of this transaction. Access to the capital markets in transactions such as this helps us to optimize returns for our owners and enhance security for our clients. The multi-year nature of the coverage allows us certainty in an important aspect of our business plan over the coming years.”
Mark Byrne, chairman of Flagstone, said: “The cat bond marketplace has been challenged to find index-based trigger structures acceptable to the credit rating agencies for capital relief, and also to find collateral structures which provide acceptable LIBOR returns while overcoming limitations of earlier deals. Montana Re’s design is at the innovative end of the market in both respects.”