Amlin has acquired coverage for US hurricane, US earthquake and European windstorm perils of up to US$150m from Bermudian insurer Tramline Re, which in turn is placing a catastrophe bond for this amount into the capital markets.

The transaction provides Amlin with fully collateralised protection over a three year period from 1 January 2012 against cumulative modelled insurance and reinsurance claims of in excess of US$630m in a single year from US hurricanes and US earthquakes (defined as gross insurance and gross reinsurance claims) and/or European windstorms (defined as gross reinsurance and net insurance claims), where such modelled claims per event are in excess of US$7m.

This cover is in addition to the protection that Amlin purchases through the traditional reinsurance marketplace and provides additional tail risk protection for the group. The cover provided by the bond is based on market share factors applied to market industry losses as reported by PCS for the US and PERILS for Europe.

As part of the transaction Amlin has entered into a risk transfer contract with Tramline Re which will issue to investors $150m of three year principal-at-risk variable rate notes. The proceeds of these notes will comprise the collateral for Tramline Re's obligations to Amlin AG pursuant to the risk transfer contract. Amlin’s Lloyd’s Syndicate 2001 and Amlin Corporate Insurance will also benefit from the cover provided by the bond through arrangements between them and Amlin AG.

The transaction was structured and arranged by Aon Benfield Securities with AIR Worldwide providing risk modelling.

Charles Philipps, chief executive of Amlin, said: “The protection afforded under this bond will complement our traditional reinsurance programme and protect the Group from frequency of major catastrophe losses allowing us to consolidate our position in improving market conditions.”

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