Pool Re secures fresh retro coverage via third ILS cat bond placement

By Ryan Hewlett

April 8 - (The Insurer) - UK terrorism mutual Pool Re has successfully placed its third catastrophe bond, securing 100 million pounds ($127.7 million) of collateralised retrocession protection from investors.

Issued through UK-domiciled special purpose vehicle Baltic PCC Limited, the transaction provides Pool Re with additional retrocession protection on top of its March 1-renewing excess of loss retro program and replaces the maturing Series 2022-1 notes.

The 2025-1 notes were priced at 5.90% and significantly broadened the number of Pool Re’s retrocession partners after attracting a larger cohort of global institutional investors than prior issuances.

“The new issuance strengthens Pool Re’s commitment to its mission of protecting UK taxpayers from the financial consequences of terror events, by enabling broader risk-sharing within the private sector,” Pool Re said in a statement on Tuesday.

Aon Securities and Howden Capital Markets & Advisory acted as structuring agents and joint bookrunners for the transaction. Clifford Chance provided legal counsel.

The mutual has previously used cat bonds to source reinsurance protection, securing an aggregate of 175 million pounds of ILS capacity from its UK-domiciled special purpose vehicle via issuances in 2019 and 2022.

Pool Re CEO Tom Clementi said: “We are committed to reducing the financial burden on UK taxpayers and strengthening national economic resilience through increased private-sector participation in the UK terrorism market. As such, we are delighted to have successfully closed our third cat bond issuance.

“At Pool Re, we continue to lead the way in raising awareness and encouraging the development of terrorism-focused ILS solutions, and we are pleased to see a record number of global institutional investors participating in this transaction.”

Clementi noted that the placement also included participation from risk modeller Moody’s RMS, which provided investors with a comprehensive view of risk using its terrorism model.

The renewal confirms The Insurer’s reporting in February that Pool Re was looking to secure its next bond from April 1, targeting a size of 100 million pounds.

While Pool Re has traditionally issued its cat bond every three years, the mutual is now looking to issue the three-year bond annually from April 2025, in line with its retro renewal.

Pool Re completed the placement of a new retrocession program on March 1 with a record limit of 2.75 billion pounds, confirming this publication’s exclusive reporting from February.

The program, which is loss-free since inception, is now the industry’s largest terrorism pool reinsurance treaty, surpassing those of France’s Gareat and the Australian Reinsurance Pool Corporation.

Pool Re currently underpins around 90% of the commercial property terrorism cover in the UK, protecting more than 2.3 trillion pounds of assets.

In addition to its role in distancing the taxpayer from terrorism loss and promoting resilience across the economy, Pool Re continues to bolster public finances through the government’s 50% share of the pool’s gross premium and 25% of its annual surplus.