American International Group(AIG)has inked a$400m reinsurance transaction with Compass Re to provide peak-zone protection against US hurricanes and earthquakes.
In order to fund its potential obligations to AIG,Compass Re has also issued a catastrophe bond.
The deal provides AIG with fully collateralized coverage against the losses on a per-occurrence basis until December 2014,using an index trigger with state-specific payment factors.
Following completion of this transaction,AIG has sponsored$1.85bn in catastrophe bonds over the past three years.
Compass Re operates as a special purpose insurer,incorporated under the laws of Bermuda,which has established a program structure enabling potential future catastrophe bond issuances.
AIG serves over 88 million customers in more than 130 geographies and jurisdictions around the globe and provides property casualty insurance,life insurance and retirement services and mortgage insurance.