Cape Lookout Re (NCIUA, 2019)
The first cat bond issued on its own by North Carolina's coastal pool, launched at 250 million dollars in January 2019 and upsized to 450 million, on an indemnity trigger.
The North Carolina Insurance Underwriting Association, known as the Beach Plan, insures wind and hail in coastal counties the private market avoids, and its losses must be covered by reinsurance and, beyond that, by assessments on the state's insurers. Until 2019, it had used cat bonds only jointly with the state's FAIR access plan, which mixed two portfolios and two reinsurance towers. Issuing alone gives it multiyear, collateralized cover calibrated to its own risk, which also shields insurers from assessments after a major storm. The indemnity trigger avoids basis risk, at the cost of exposing investors to the pool's underwriting and claims handling. The limit is the three-year term: the layer has to be renewed at maturity, at whatever the market charges then.
Launched in January 2019 at 250 million dollars, Cape Lookout Re (Series 2019-1) was upsized in February to 450 million, 80 percent more, for three years of cover against named storms and severe thunderstorms in North Carolina; the notes matured in February 2022.
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