Everglades Re (Citizens, 2014)
A 1.5-billion-dollar catastrophe bond issued in May 2014 for Florida's public insurer, long the largest single issue on the market.
The insurer of last resort of a hurricane-exposed state carries millions of policies the private market no longer wants, and its deficit after a severe season falls on policyholders across the whole state through surcharges. To limit that pass-through, Citizens Property Insurance in Florida buys protection from reinsurers and investors. The 2014 Everglades Re issue changed the scale: marketed at 400 million dollars, it was raised twice to 1.5 billion in response to demand. It covers on an annual aggregate basis, meaning it pays when losses from several events in one year exceed a threshold, rather than a single large hurricane. It showed that the investor market could absorb at once a capacity comparable to that of a large reinsurance program.
Placed in May 2014 by the Bermuda vehicle Everglades Re, the 2014-1 series reached 1.5 billion dollars and was to pay when insured losses from several events in a year exceeded 5.202 billion dollars; Standard & Poor's rated it B(sf). It was part of a 3.1-billion-dollar risk transfer program approved by Citizens for 2014.
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