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Rail News: Amtrak
Amtrak secures insurance coverage for natural disasters in Northeast Corridor
Amtrak has obtained $275 million in insurance protection against natural disaster damage to its Northeast Corridor infrastructure, the railroad announced yesterday.
The railroad used a catastrophe bond to secure the coverage, which lasts just under three years and helps protect against the kind of infrastructure damage that Amtrak experienced during Hurricane Sandy in October 2012. Sandy created a storm surge that inundated both of Amtrak's Hudson River rail tunnels and two of the four tubes of the East River tunnel with corrosive salt water.
Passenger Rail Insurance Liability, a Bermuda-based insurer wholly owned by Amtrak, entered into a reinsurance contract with PennUnion Re Ltd., to provide the catastrophe protection, Amtrak officials said in a press release.
"This is the first time Amtrak has used the capital markets to broaden our base of insurance coverage," said Gerald Sokol Jr., Amtrak’s executive vice president and chief financial officer. “The catastrophe bond market provides us with a means to diversify our sources of insurance in a cost effective manner.”
GC Securities and Goldman, Sachs & Co. served as joint structuring agent and joint book runner for the Series 2015-1 catastrophe bonds. Other advisers involved in the transaction were RMS Inc., a catastrophe risk modeling firm, and Mayer Brown LLP, transaction counsel.
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