Rewire aims to originate, structure & place ILS deals using technology

by Artemis on September 5, 2014

Insurance-linked securities (ILS) industry veterans Stefano Sola and Richard Pennay have launched a new technology focused ILS firm, Rewire Holdings LLC, seeking to increase efficiency in the syndication of catastrophe risk to reinsurance and capital markets.

Rewire Holdings aims to leverage up-to-the-minute technologies, such as the internet and cloud storage, to facilitate more efficient origination, structuring and placement of insurance-linked securities, such as catastrophe bonds, and catastrophe reinsurance contracts.

The firm will create a team of highly specialised and independent capital market and insurance professionals that will originate, structure and distribute reinsurance risk. The focus will be on increasing the transparency, efficiency and execution of capital markets transactions using a web-based, closed-end marketplace, where insurers or cedents and markets or investors can communicate and transact directly.

Essentially, Rewire aims to replicate the origination, structuring and bookrunning process online, using technology to speed the process up, improve transparency, increase communication and feedback, as well as enhancing the efficiency of the whole ILS or reinsurance deal creation, marketing and placement process.

Rewire has been co-founded by two ILS sector professionals with years of experience between them. Co-founder and Chief Executive Officer, Stefano Sola, has 20-years of capital markets experience both on the banking side and as a structured finance and corporate issuer. Most recently Mr. Sola was the Chief Investment Officer at JGWPT Holdings Inc. where he built JGWPT’s financing and securitization platform. Prior to that Sola was a managing director at Swiss Re Capital Markets.

The other co-founder and President, Richard Pennay, has extensive experience in the ILS space having worked as a cat bond structurer since 2006 Pennay worked for Swiss Re since 2001, moving into ILS and cat bond structuring in 2006. In his time Pennay has structured many catastrophe bonds for European, Japanese and US insurance companies.

Sola and Pennay are joined by two other founding team members; Vincent Myers, another ex-Swiss Re Capital Markets employee and a seasoned insurance-linked securities professional with 5 years of cat bond structuring experience, and Sangyeop Lee a financial analyst.

Rewire has developed a platform it calls rewireconnect which is effectively a closed-end environment for syndicating risk and deals. Rewire hopes the platform will; “Significantly improve issuers’/sponsors’ timing & cost to market, entice a broader pool of issuers/sponsors to access the market, deliver more product to investors in an enhanced & increasingly standardized format, while promoting direct dialogue between market stakeholders.”

Potential issuers or sponsors of ILS deals and investors can all join rewireconnect where they will be able to collaborate and communicate on primary issuance deals as well as see a pipeline of secondary opportunities available for execution.

Investor members will be able to receive updates by email on primary and secondary ILS dealflow on the rewireconnect platform, as well as directly contact counterparties. Issuers and sponsors will be able to use the platform for bookbuilding purposes as well as take advantage of the streamlined structuring services that Rewire itself will offer.

Some of the Rewire offering puts the team into direct competition with brokers and capital markets structuring units, as well as those performing bookrunning. However broker dealers can also leverage the rewireconnect platform for their own transactions, likely by using it to make the bookrunning process more efficient and to increase offering reach to investors that use it as well as listing secondary opportunities.

Sola commented on the launch; “We are very excited to launch this new venture with a leading team and look forward to continuing and expanding our industry relationships with insurance companies and investors alike.” Pennay added; “Rewire fully intends to take reinsurance and capital markets convergence to a new frontier.”

With internet technology disrupting almost every industry on the planet it really is about time it began to make real headway into reinsurance and ILS. The efficiencies possible by taking some processes online can be huge and Rewire are launching at an interesting time when the ILS market has many new entrants, a much greater audience and is perhaps ready now to adopt technology to make dealflow smoother.

It will be fascinating to watch Rewire as it enters the market and seeks to gain traction. Technology is a huge enabler of efficiencies in financial markets, hence the current buzz around financial technology or fintech in VC circles where reinsurance is firmly on the radar as an industry ripe for disruption. It will be interesting to see whether the reinsurance and ILS market can step away from its old-fashioned face-to-face deal-making process, or at least add a new tool to it, and adopt these modern technologies.

If the Rewire team keep the platform very focused on core tasks involved in the ILS deal issuance and syndication process, with the aim of solving known problems, removing roadblocks, providing a more user-friendly way to transact and increasing efficiencies, then they have every chance of success.

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