BNY Mellon has been appointed trustee, paying agent, account bank and custodian for a USD100 million Turkish cat bond transaction designed to protect insurers against the risks of potential earthquakes.
The bonds were issued by Bosphorus Ltd, a Bermuda-based special purpose reinsurer created by the Turkish Catastrophe Insurance Pool (TCIP), the originator of the transaction. Eureko Sigorta A.Ş. (Eureko Sigorta) is the institution administrator of the bonds and acts on behalf of TCIP to provide day-to-day administrative services. Cat bonds are risk-linked securities that transfer a specified set of risks associated with hurricanes or earthquakes from an insurer or a nation state, to investors.
Can Akın Cağlar, CEO of Eureko Sigorta and board member of TCIP, says: “TCIP is pleased with how the capital markets received the Turkey earthquake cat bond issuance. We, as TCIP, are proud to be the sponsor of such a successful transaction.”
Süha Çele, Executive Board Member of Eureko Sigorta, adds: “Our previous bond Bosphorus 1 Re was the first cat bond covering Turkish perils and a real success story. We are delighted to see that this second bond was also well received by the capital markets. In view of the constantly growing portfolio of TCIP, our cooperation with the capital markets will continue in the near future which will enable TCIP to diversify its reinsurance buying and utilise its multi-year capacity programme at stable prices.”
The global cat bond market continues to grow. Over the last 10 years the amount of cat bonds outstanding has increased from about USD6 billion to USD23 billion. BNY Mellon is a leading provider of corporate trust services to the insurance-linked securities market.
“TCIP’s innovative use of the capital markets illustrates the continuing growth of the insurance-linked securities market,” says Paul Traynor (pictured), head of insurance services for Europe, the Middle East and Africa at BNY Mellon. “The combination of insurers working with the capital markets, governments and technology experts can provide much-needed protection in vulnerable areas of the world.”