Allianz Risk Transfer (Bermuda) Limited has successfully closed an innovative catastrophe bond (cat bond) to transfer hurricane risk in coastal areas of the southeastern US in an amount of 120 million US dollars. Part of an open-ended program, this is the first series of notes issued by Blue Coast Ltd., a special purpose vehicle launched for the benefit of the Allianz Risk Transfer group (ART).

"Cat bonds offer us a valuable tool to manage residual retained risk in our proprietary and client books," said Chris Fischer Hirs, CEO of ART.

ART is the first sponsor to utilize an innovative trigger structure which allocates industry losses at the county level along coastal areas of the southeastern US. The structure allows ART to create a bespoke hedging solution which can be designed to closely match the company’s underlying portfolio whilst providing a transparent industry loss index product to investors.

"By calibrating the trigger structure of the cat bond protection at a county level, rather than a state level, we can improve our ability to hedge certain underlying US hurricane risks and manage our balance sheet while better minimizing and managing our basis risk relative to other nonindemnity hedging alternatives," said Bill Guffey, head of ART’s insurance-linked securities business.

The three classes of securities issued by Blue Coast Ltd. are denominated in US dollars and offer investors a coupon of 9.52, 14.75 and 18.89 percentage points over three-month LIBOR. The notes are scheduled to be redeemed in December 2010, and have received ratings of BB-, B+ and B from Standard & Poor’s.

Allianz sponsored two previous cat bond transactions in 2007, Blue Wings Ltd. (sponsored by Allianz Global Corporate & Specialty) and Blue Fin Ltd. (sponsored by the reinsurance division of Allianz). This is the Allianz Group’s first cat bond transaction in 2008.

Allianz Risk Transfer (Bermuda) Limited worked with Deutsche Bank and GC Securities (an affiliate of Guy Carpenter) to structure and place the transaction. The transaction utilizes industry losses provided by PCS and modeling provided by AIR, two leading service and data providers in the catastrophe bond and reinsurance markets.

The Allianz Risk Transfer group was founded in 1997 as the center of competence for the alternative risk transfer business within the Allianz Group and is now part of Allianz Global Corporate & Specialty, the industrial arm of the Allianz Group. ART provides industrial, financial and insurance companies worldwide with innovative solutions in the management of financial and insurance risks through cutting-edge risk analyses and portfolio management processes.

Allianz Global Corporate & Specialty was founded in 2006. With a turnover last year of over 2.8 billion euros, it is one of the world’s leading insurers for corporate and specialty clients, providing unique end-to-end risk solutions with its unequalled industry expertise and knowledge.


No offer

All the securities referred to herein having been sold, this announcement is a matter of record only. The notes referred to herein have not been and will not be registered under the securities laws of any jurisdiction, and any offer or sale thereof may only be made in a transaction exempt from registration.


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