Puerto Rico Parametric Re (2024)
The Puerto Rico government's first parametric cover bought from the capital markets, through an 85-million-dollar catastrophe bond issued in June 2024.
A heavily indebted territorial government, hit by Hurricane Maria in 2017 and then by the 2020 earthquakes, needs immediate liquidity after a catastrophe, before damage can even be assessed. A parametric cover meets that need: it pays according to the measured intensity of the event. Unable to issue itself, the Puerto Rico Treasury bought a policy from an insurer, reinsured and then retroceded to a Bermuda vehicle that sold bonds to investors. This chain of contracts lets a public entity access the capital markets while remaining a mere policyholder. The cover pays per occurrence, for named storms and earthquakes.
Puerto Rico Parametric Re Ltd. series 2024-1, launched with a 75-million-dollar target, was raised to 85 million and issued in June 2024 for the Puerto Rico Department of Treasury, on a per-occurrence parametric trigger covering named storms and earthquakes.
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