Insurer grabs an extra $100m in $250m bond launch

US military insurer USAA has sold a $250m catastrophe bond, $100m larger than initially planned, Reuters reported.

It will protect against losses over $35m from US hurricanes and earthquakes for three years. One tranche also covers potential losses from severe storms and wildfires.

USAA's 13th catastrophe bond will be inplace before the June start of the US hurricane season. Maturity date is June 6, 2012.

Sold via Cayman Islands-based issuance vehicle Residential Reinsurance 2009, the transaction was divided into three tranches, each of which was initially sized at $50m.

  • $70m, was priced late on Tuesday to yield 13% over three-month Libor
  • $60m, was priced to yield 17% over three-month Libor
  • $120m was priced at three-month Libor plus 12.5%.

Credit rating agency Standard & Poor's assigned BB-, B- and BB- ratings to the three tranches last week.