Mariah Pushes Cat Bond Monitoring

Chris Westfall
Chris Westfall

The announcement Wednesday from Standard & Poor’s that Mariah Re was nearing its attachment point, after a previous reports that showed losses remaining stable, may reveal the difficulty the market will face as it attempts aggregate smaller multiple events into a bond rather than single, large catastrophes.

S&P published a note on Tuesday saying that losses on Mariah increased from $96.02 million to $125.5 million, after a loss update from the Property Claims Service. The update brought total losses for the current risk period to $726.9 million and brings the bond perilously close to its $825 million attachment point.

Monitoring Mariah provides unique challenges from a ratings perspective, says Gary Martucci, director with S&P in New York. “You can have several events occur without any mention of it in the media. Therefore, this transaction has to be monitored more continuously than a straight hurricane or earthquake bond, which get a lot of media attention given the damage associated with them,” Martucci explains.

Mariah was launched last year through two, $100 million notes that cover American Family Mutual Insurance from severe thunderstorms in the U.S. The structure was heralded as a “breakthrough” for catastrophe bonds that traditional covered large earthquakes and windstorm.