Glacier Reinsurance said in a conference call this week that it plans to trigger a $67.5 million portion of the Nelson Re catastrophe bond as a result of losses from 2008’s Hurricane Ike.
Glenn Campbell, Glacier CFO, warned Nelson Re Class G note holders may experience a “significant loss.”
According to minutes of the conference call, Glacier’s ultimate net loss under the Nelson Re Class G reinsurance agreement was approximately $123 million as of September 30.
Campbell added that actual paid losses due to Hurricane Ike were approximately $52 million, and Glacier’s actual paid losses covered by the Class G reinsurance agreement were approximately $29 million.
Although Glacier has yet to provide Nelson Re with a formal proof of loss, Campbell said that the expect Glacier’s actual paid losses to increase in the near and medium-term. He added that the reinsurer “may be in the position” to file the proof of loss notice in the first quarter of 2010.
Nelson Re’s Class G notes attach if Glacier’s losses exceed $145 million.
Moody’s put Nelson Re’s Class G notes on notice for downgrade in August after Glacier announced it had revised its losses from Hurricane Ike from $65 million to $100 million.
HSBC Bank (Cayman) Limited acts as administrator for Nelson Re, while Cadwalader, Wickersham & Taft is counsel.
AIR provides catastrophe modeling.
