LONDON Feb 20 U.S. insurer Nationwide Mutual
Insurance Company is seeking to raise $200 million
protection for hurricanes and earthquakes in the United States
by selling a catastrophe bond through Cayman Islands-based
vehicle Caelus Re.
Standard & Poor's assigned a BB- rating to the notes to be
issued by Caelus Re 2013 Ltd, the credit rating agency said on
Catastrophe bonds allow insurers to pass on extreme risks,
such as those related to earthquakes or hurricanes, to financial
market investors, and are seen as an alternative to reinsurance.
Catastrophe bond issuers make regular interest payments to
the bondholders, and, if no catastrophe-related losses are
incurred, return the principal once the notes expire.
The transaction is the second to be issued this year,
following a deal from U.S. health insurer Aetna, which
sold $150 million of protection for medical benefit claims.
Caelus Re 2013 is the third to be issued by Nationwide,
which last sold a transaction in 2010.
The notes will cover any losses from hurricane and
earthquakes in the United States, including any damage caused by
fires and water damage, S&P said.
Any losses that Nationwide incur from a hurricane or
earthquake will need to reach $1.90 billion before a payout is
triggered. If the bond is activated, the investors who brought
the bonds will need to pay out all or part of the amount they
S&P said it expects Nationwide pay the first 10 percent of