European Reinsurers Brush Off Hurricane Irene

In May, Johnston sold approximately $200 million of bonds that are 100% exposed to windstorms in the state on a per-occurrence basis. The bonds consisted of $70 million in Class A notes and $131.8 million in Class B bonds. They are rated by S&P at Double B-. A group of 2010 bonds also issued by Johnston and rated the same were also trading substantially.

Additional bonds with Irene exposure were 2009 Longpoint Re II Ltd. bonds covering Travelers Indemnity and Ibis Re bonds covering Assurant Inc. subsidiaries. However, Gary Martucci, director at Standard & Poor’s in New York, said in the report that although the Johnston bonds have primary exposure to both barrier islands and coastal counties in Irene’s path, the company’s policy is not to take action on any bond ratings until an event hits. “There is no guarantee those bonds will trigger,” he was quoted saying.

Reuters reported that S&P had issued a Friday statement that said, “Given the uncertainty of where the hurricane ultimately makes landfall, its subsequent course, and the resulting covered losses, we will not take any rating actions until after the event has passed through the U.S.”