Mass Transit

SEP-OCT 2014

Mass Transit magazine features agency profiles, industry trends, management tips and new product information.

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82 | Mass Transit | MassTransitmag.com | SEPTEMBER/OCTOBER 2014 Keep your feet on the road with one of the largest inventories of transit replacement parts, components, custom kits and accessories in North America. © 2014 ABC Companies. All rights reserved. *Some exclusions may apply DON'T BE LEFT WITHOUT THE RIGHT PART. ONE OF THE ABC COMPANIES 800.428.8610 (Canada-800.265.0520) or visit www.abc-companies.com/transit_parts.asp CALL US TODAY! ALL MAKES AND MODELS carried in stock * 24-HOUR SHIPPING on in-stock items * For more information, visit www.MassTransitmag.com/10064868 Utilization of Catastrophe Bonds for the Rail Industry In 2013, First Mutual Transportation Assurance Co., which is asubsidiary of the Metropolitan Transportation Authority, secured $200 million in cov- erage for three years from storm surge caused by named storms impacting the New York area. The recovery mecha- nism utilizes a parametric structure based on water height levels at various measuring gauges. FIGURE 3: ILS Trigger Overview Aon Benfield Securities Inc. Indemnity • Minimal basis risk • Requires significant disclosure of underlying book of business • Price dependent on quality of underlying exposure data • Recast modeled losses for historical events should be aligned with the sponsor's actual losses • Full development of losses may delay recovery Industry Loss • Sponsor retains basis risk • No disclosure of underlying book of business • PCS industry loss estimates (US); PERILS (Europe) • Full development of losses may delay recovery • Basis risk can be reduced with specific regional weight factors based on sponsor's exposures • Can be weighted by line of business, geography and peril Modeled Loss • Basis risk can be minimized with modifications to the national portfolio and adjusted factors • Limited disclosure of underlying book of business • Flexibility to change national portfolio to reflect changes in underlying exposures over time. • Acceleration of claims payment following trigger event Parametric/Parametric Index • Sponsor retains basis risk • No disclosure of underlying book of business • Has been used for earthquake and Europe wind transactions • Acceleration of claims payment following trigger event • Basis risk can be reduced with specific station weight factors based on sponsor's exposures • Can be weighted by the line of business, geography and peril RECOVERY SLOWER FASTER CAT BOND MARKET

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