Fremantle, Redwood and Newton Exit

Story updated to include a comment from Brit Insurance.

Three Caymans-based catastrophe bond deals representing $500 million were removed from the market this month, although participants are hopeful that the capacity will soon be replaced.

Fremantle Ltd., a special purpose vehicle providing $200 million of collateralized multi-event cover for Brit Insurance Limited, expired last week after three years. The structure covered U.S. earthquake and hurricane risk, Japan earthquake and typhoon risk, and Europe windstorm risk. It was originally structured by ABN-AMRO with a trigger structured by RMS.

“This was a three year deal. It ran from June 2007 to June 2010 and delivered full returns to investors,” a Brit insurance spokesperson said in an emailed statement. “There are no immediate intentions to issue another cat bond but we constantly monitor all markets and review developments as appropriate.”

Swiss Re‘s $150 million Redwood Capital XI Ltd. also expired in January. The bond covered California earthquake for Swiss Re through a one year period, with Swiss Re Capital Markets as sole manager and bookrunner. Risk modeling for Redwood was performed by EQECAT.

Finally, earlier in this month Newton Re defaulted on its final payment on a $150 million note after being crippled by collateral issues following the bankruptcy of Lehman Brothers. Newton was an indemnity trigger structure and was issued in February of 2008 by Catlin Group based in Bermuda.

Insurance linked securities specialists remain confident that capacity leaving the market will soon be replaced. A recent report by Aon Benfield Securities that while $4 billion in catastrophe bonds are set to mature in 2011, they anticipate new issuance to top out between $5 billion to $6 billion.

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