IAG’s Cat Bond is both the first covering Australian/New Zealand all natural perils and the first deal under Singapore’s new insurance linked securities laws
BNY Mellon, a global leader in investment management and investment services, has been appointed Indenture Trustee, Reinsurance Trustee, Paying Agent, Account Bank, Singapore Security Trustee, and Trust Accountant for an A$ 75 million Singaporean Catastrophe (Cat) Bond transaction by Insurance Australia Group (IAG).
Cat Bonds are risk-linked securities designed to protect insurers against the risks of potential catastrophe events, with IAG’s deal being the first to offer protection against all natural peril risks in Australia and New Zealand.
This is IAG’s first Cat Bond, issued through Orchard ILS Pte Ltd., a Singapore-registered special purpose vehicle (SPV). The transaction provides IAG A$ 75 million of protection, forming part of its aggregate sideways cover, which in total provides protection of A$ 475 million excess of A$ 375 million. Orchard ILS Pte Ltd. adds a new element to IAG’s risk transfer program and diversifies its suite of available reinsurance solutions.
“We were well positioned to support IAG’s Cat Bond given BNY Mellon’s reach,” said Kenneth Cheong, Managing Director of Corporate Trust, Asia Pacific, BNY Mellon. “This deal saw our experts working with various parties on the global transaction, with teams involved from New York, Sydney, and Singapore.”
“IAG has had a reinsurance presence in Singapore for more than a decade,” added BNY Mellon’s Cheong. “With BNY Mellon’s technical and servicing support, this Cat Bond issuance is a significant milestone in the development of Singapore’s insurance-linked securities (ILS) market. IAG’s deal will be one for the books as the first deal to take advantage of Singapore’s brand new ILS laws.”
Singapore’s financial sector, with the support of its proactive regulators, once again delivered cutting-edge capital market solutions. This deal highlights the potential of the ILS market in the region, and is aligned with the city-state’s efforts to establish itself as a global hub for Asian risk transfer.
Singapore has taken steps to establish itself as an ILS domicile. As part of these efforts, the Monetary Authority of Singapore (MAS) introduced an ILS grant scheme in February 2018. The grant scheme, which was developed in consultation with industry experts including GC Securities and IAG, funds upfront ILS bond issuance costs.
About BNY Mellon Corporate Trust
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About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries. As of March 31, 2019, BNY Mellon had US$34.5 trillion in assets under custody and/or administration, and US$1.8 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.