February 26, 2024

Investment giant Blackstone has successfully secured $250 million of multi-peril (storm and earthquake) and indemnity-based catastrophe insurance protection for its real estate fund through a new Wrigley Re Ltd. (Series 2023-1) catastrophe bond transaction.

black stone logoThe new Wrigley Re 2023-1 catastrophe bonds, now closing today, will provide Blackstone’s real estate investment strategy with designated storm protection across the United States and Canada, as well as annual Total earthquake protection. All U.S. states except California and Canada.

The Wrigley Re 2023-1 catastrophe bond also contains $150 million in aggregate annual notes and will provide California-only earthquake protection to Blackstone’s real estate strategy.

Both tranches now provide Blackstone with approximately three years of catastrophe indemnity insurance protection to protect the real estate portfolio it manages from major natural catastrophe events.

Following the successful sale of a second cat bond by Blackstone Real Estate Fund, the investment giant has abandoned its first parametric overlay approach.

Recall that the Wrigley Re Ltd. (Series 2021-1) catastrophe bond deal, valued at $50 million, provides Blackstone with a California earthquake Loss Protection 2024.

So, with the new Wrigley Re 2023-1 cat bond now complete and with greater coverage, Blackstone now has $300 million in effective cat bond protection from both deals.

As a reminder, the two tranches of the newly issued $250 million Wrigley Re Series 2023-1 catastrophe bonds provide capital market-backed mortgage retrocession reinsurance protection to global reinsurer Hannover Re, which is owned by Blackstone Capital Markets investors. represent.

Coverage was then transferred through a reinsurance agreement between Hannover Re and Blackstone’s Gryphon Mutual Property Americas IC real estate captive insurance company, which in turn transferred coverage to real estate funds managed by the investment giant.

At closing, the $100 million Class A Notes provide protection from each occurrence of storms in the U.S. and Canada, and provide annual aggregate earthquake protection in all U.S. states except California and Canada, with an initial expected loss of 0.56% priced in spreads Low end of guidance 6.5%

The $150 million Class B notes, which provide only California’s total annual earthquake protection, were also priced at the low end of the 7% initial guidance.

Blackstone is a very unique case in terms of major investment managers with sophisticated insurance and risk management approaches.

Few other agencies have the resources and sophistication to do so, or have recognized the need to provide more disaster insurance protection and leverage third-party capability sources to do so.

However, we expect that over time, as managers increasingly look to protect their portfolios from natural disasters, weather and climate-related events, we will see more asset managers looking to transfer risk over its portfolio of assets exposed to such risks. major catastrophic event.

You can read all about the Wrigley Re Ltd. (Series 2023-1) cat bond and all other cat bonds ever issued in the Artemis Transactions Directory.

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