LONDON Feb 27 Credit Suisse (CS) has
released around 80 percent of funds it set aside to protect
investors from potential losses on superstorm Sandy after
deciding they would not be impacted by the hurricane.
CS created a so-called "side-pocket" in November for
investors in its CS Iris Low Volatility Plus Fund.
The bank said on Wednesday its dedicated insurance linked
securities (ILS) fund was "highly unlikely" to be triggered by
Sandy losses based on a recent industry loss estimate.
ILS are capital market vehicles that allow a company to shed
The most common form of ILS is the catastrophe bond - in
which insurers manage their exposure to natural disasters by
passing on potential losses to investors.
The most recent loss estimate from U.S. data aggregator
Property Claims Service (PCS) - which is used to define whether
an insurance event qualifies for a payout under the terms of the
deal - put insured losses from Sandy at $18.75 billion.
Even though that estimate is expected to rise, Credit Suisse
said the loss trigger of $35 billion "is now highly unlikely to
be reached" and "there will be no impact from hurricane Sandy".
Side pocketing is a common practice for hedge funds, and
developed during the credit crisis, when buyers for many assets
disappeared and investors started demanding their money back.
- For more details on cat bond transactions, see the Thomson
Reuters Insurance Linked Securities Community, click here.
(Editing by David Cowell)