MTA secures $200 million in insurance protection against 'superstorm' damage

The Metropolitan Transportation Authority (MTA) has secured $200 million of insurance protection against potential future damage to its infrastructure in the event of destructive storm surges similar to those that occurred during Hurricane Sandy last year.

The insurance was funded through the offering of "catastrophe bonds" by MetroCat Re Ltd., a special purpose insurer, MTA officials said in a press release.

The agency's premium cost for the coverage is "well below" quotes received in spring for traditional property coverage, they said.

"In the aftermath of Superstorm Sandy, the traditional avenues we use for insurance and reinsurance contracted dramatically, making it exceedingly difficult for the MTA to obtain insurance," said MTA Chairman and Chief Executive Officer Thomas Prendergast. "But as a result of this savvy and novel reinsurance arrangement, we are now in a stronger position should our area … face another large-scale storm-surge event within the next three years."

The transaction protects the agency in the event water levels reach designated heights in the New York City region during any hurricane, tropical cyclone or storm through Aug. 5, 2016.