Towers Watson subsidiary places $20 million Florida cat bond

Towers Watson Capital Markets (TWCM) announced Monday it has arranged a private placement catastrophe bond for the Florida Municipal Insurance Trust (FMIT), an organization that offers workers’ compensation, liability, property and health insurance to local governments in the state.

The bond, Sunshine Re 2013-1, closed at $20 million with a coupon for 9.25% for three-year Florida risk, according to TWCM, a wholly-owned subsidiary of professional services firm Towers Watson. The transaction transfers risks associated with named windstorms in Florida on a per-occurrence basis.

“We continue to see increased support from insurance-linked securities investors for our private placement approach that brings new cedants and diversifying perils to the market,” Michael Popkin, a TWCM senior vice president noted in the announcement.

The bond will provide FMIT with three-year indemnity-based collateralized catastrophe reinsurance coverage.

“The indemnity-based coverage from the collateralized capacity works very well with the rest of the reinsurance placement,” noted Steve Levene, corporate practice leader for insurance brokerage and risk consulting at Towers Watson. “FMIT took a lot of comfort in the fact that the cover follows the fortunes of its underlying book of business,” he added.

The deal is the fourth private placement bond that TWCM has successfully placed in the market. The previous three were all one-year transactions. “By extending Sunshine Re to three years, FMIT gained additional stability and flexibility in its reinsurance program, sourced many new markets and built relationships with the growing convergence reinsurance markets,” the TWCM statement said.