Build America Mutual, the only mutual US municipal-only bond insurer, has completed a $150 million, fully collateralised reinsurance agreement with Fidus Re Ltd, the Bermudian-based restricted special-purpose insurer.

After the transaction, BAM’s claims-paying resources total more than $1.4 billion, the company said.

“Volatile market conditions are continuing to drive strong demand for BAM-insured bonds from investors who are focused on liquid bonds with durable, high-quality ratings,” said Seán W, McCarthy, the chief executive of BAM.

“The latest Fidus Re transaction demonstrates BAM’s focus on serving our member issuers and investor stakeholders by maintaining excellent financial strength.”

Fidus Re is an SPI that solely provides reinsurance protection to BAM and represents an innovative tool for mutual insurers to access the capital markets, the company said.

BAM said the Fidus Re trusts are fully collateralised by assets held in money market funds and were funded by the sale of insurance-linked notes by Fidus Re, which carry AA ratings from Kroll Bond Rating Agency.

It added that the Fidus notes are non-recourse to BAM; principal payments on the notes will be funded from assets in the trusts.

The latest Fidus Re transaction will be reflected in BAM’s year-end results, which will be published in February, the company said.