Amtrak Secures Natural Disaster Insurance for Northeast Corridor

The passenger rail company obtained $275 million of protection to insures against damage to its infrastructure in the Northeast Corridor from a natural disaster's storm surge, wind, or earthquake.

Amtrak's most significant problem right now may be the prospect of losing access to freight railroad companies' tracks due to the looming positive train control Dec. 31, 2015, deadline, but the passenger rail company announced Oct. 14 it has become better prepared for natural disasters: Amtrak has obtained $275 million of insurance protection from PennUnion Re Ltd., an independent special purpose insurer based in Bermuda that issued catastrophe bonds to fund and collateralize this insurance.

This amount of protection insures against damage to Amtrak-owned infrastructure in the Northeast Corridor from a natural disaster due to storm surge, wind damage, or earthquake. Passenger Rail Insurance Liability, a Bermuda-based insurance company wholly owned by Amtrak, entered into a reinsurance contract with PennUnion Re Ltd. to provide the protection.

"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."

"Superstorm" Sandy in 2012 was a recent, stark example of the risk posed by storm surge: Sandy's surge caused seawater to inundate both tubes of the Hudson River tunnel and two of the four tubes of the East River tunnel, causing more than $1 billion in damage, according to Amtrak.

For more information about Amtrak, follow it on Twitter (@Amtrak) or read its blog at blog.amtrak.com.

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