Zombie Catastrophe Bond Nelson Re Lives On

Chris Westfall
Chris Westfall

Long suffering $76.5 million Nelson Re catastrophe bond will live through the summer as Glacier Reinsurance elected to extend the notes as an arbitration battle continues, according to a filing with the Cayman Island Stock Exchange Tuesday.

Glacier requested that the reinsurance agreement surrounding Nelson Re’s class G notes be extended from its June 6, 2012 date to September 6, 2012, according to the filing. The document did not reveal a reason for the extension.

In 2009 Glacier Reinsurance said in a conference call that it would trigger Nelson Re following losses from 2008’s Hurricane Ike and that note holders may experience a “significant loss.” Nelson Re’s Class G notes attached if Glacier’s losses exceed $145 million.

In 2010 Glacier itself was put into runoff. Last year the notes were extended twice as the sponsor and administrator haggled over loss calculations. The dispute eventually entered arbitration.

Originally, HSBC Bank (Cayman) Limited acted as administrator for Nelson Re while Cadwalader, Wickersham & Taft acted as counsel.

AIR provided catastrophe modeling.