Vecta I Ltd. embedded value life insurance securitization completes at C$120m

by Artemis on December 23, 2011

The first 144A embedded value life insurance securitization deal to be issued since 2007 (see graph below) has now completed. The Vecta I Ltd. transaction, which enables Aurigen Reinsurance to monetise the cash flows associated with life insurance and mortality business it has reinsured, was rated today by Standard & Poor’s as a C$120m tranche of 8% fixed-rate notes.

The Vecta I transaction completing successfully shows that the embedded value life securitization market still has life in it and it’s likely that others will noww assess the feasibility of following this deal to market. S&P rated the notes ‘BBB+’.

More details on the Vecta I Ltd. transaction can be found here.

Swiss Re recently shared this excellent graph showing the life insurance-linked securities deals which have come to market since 2003. You can clearly see the disappearance of embedded value deals after 2007. Perhaps this transaction will help to revive the life ILS market?

Life insurance-linked securitization deals since 2003 - As of December 9, 2011. Source: Swiss Re Capital Markets

Life insurance-linked securitization deals since 2003 - As of December 9, 2011. Source: Swiss Re Capital Markets (click graph to open larger version)

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