Swiss Re Capital Markets launched two new tranches of catastrophe bonds from the Redwood programme for the California Earthquake Authority (CEA) in January 2005

The tranches, Redwood Capital V and VI are worth $150m each. They cover the CEA against California quake risks. Each tranche is structured slightly differently. Redwood V can be triggered when personal lines property losses reach $11.5 billion. It then pays out on a sliding scale until the loss reaches $14 billion. Redwood VI uses losses from all business lines to calculate the trigger points. The bonds have a maturity of two years. Eqecat provided risk modelling.

Hartford Financial Services sponsored a $247.5 million cat bond with two separate coverages: one provides $180 million of reinsurance for losses from US northeast and Gulf coast hurricane events. The other coverage provides $67.5 million of reinsurance for losses resulting from certain US earthquakes or hurricanes in the year following the occurrence of a major US earthquake or hurricane event.

Source: Artemis,