The specialty re/insurer has successfully placed a new catastrophe bond, Loma Reinsurance Capital Limited Series 2011-1, which will provide $100 million of protection against the multiple occurrence of certain named perils.

Its CEO has said the move is in preparation for a rise in the cost of reinsurance capacity in the coming months.

Mark E. Watson III said, "The timing was right for Argo to enter the ILS market. With increased demand for our products and potentially increasing prices for the reinsurance protection we purchase, this bond will allow us to pursue our underwriting strategies, taking advantage of the market opportunities, knowing that the risk to the Group is substantially reduced."

A statement from Argo said: “This is Argo Group's first bond issuance in the Insurance Linked Securities (ILS) market. The protection afforded under the bond protects the group from frequency of catastrophe losses, allows the group to further capitalize on market opportunities and efficiently replaces capital otherwise needed to support the risk of frequent and sizable events.”

Coverage provided by the bond incepts June 17, 2011, and runs for a period of 18 months. The bond provides protection against the occurrence of two or more U.S. hurricanes, U.S. earthquakes, European windstorms, or Japan earthquakes. For activation the bond establishes per occurrence minimum loss amounts and is triggered by a second and subsequent event that meets specific loss criteria.

The bond has been rated "BB-" by Standard & Poor's.