Insurance linked investing firm Twelve Capital in €20m private debt deal

Swiss headquartered specialist insurance-linked securities (ILS) and reinsurance-linked investment manager Twelve Capital has announced the completion of a €20m private debt transaction for Alpha Insurance A/S of Denmark.

The transaction, the latest in Twelve Capital’s insurance linked investing operations, provides Alpha Insurance A/S of Denmark with €20m of Solvency II / Tier 2 compliant capital. JLT Advisory Ltd. facilitated the transaction.

Twelve Capital operates both an insurance-linked securities (ILS) investing business and an insurance private debt investments business, as well as a strategy which blends the two. This provides insurance linked investors with a way to access the returns of the re/insurance market through two methods, giving them access to a broader value chain than ILS alone.

By providing both reinsurance capacity as well as debt financing capital to insurers and reinsurers, Twelve Capital can deepen its relationship with clients considerably, providing capital for growth as well as the transfer of risks. As insurers increasingly look to use reinsurance as a capital management tool, the option of private debt will likely increase in profile, suggesting that use of private debt will grow.

Balancing and managing capital, for financing and growth, in the re/insurance business is also increasing in importance, with the impending regulatory environment under Solvency II approaching. Private debt provision is a good way for European insurers to boost their Tier 2 compliant capital and Twelve Capital has positioned itself at the forefront of this trend.

This particular transaction involves a listed, unrated note debt instrument, with a ten-year maturity.

John Butler, Partner and Head of Sourcing at Twelve Capital, commented on the deal; “We are pleased that our private debt product is clearly meeting the capital needs of good quality smaller and mid-sized (re)insurers in our target markets of both Europe and the US. In addition we were pleased to be introduced to Alpha via JLT, who, along with many other major intermediaries, work closely with us in distributing our Debt and ILS and other products. This is a good illustration of the unique added value Twelve can bring through providing solutions across the capital structure.”

Leif Corinth-Hansen, CEO, Alpha Insurance A/S, added; “Alpha Insurance has for some time been looking around the financial markets to find a way to strengthen its balance sheet, not only to prepare for Solvency II regime, but also to support the continued growth of the company. In Twelve Capital we found a partner, which not only had the sufficient funds, but even more important a team of dedicated highly qualified employees, who knew insurance business in and out, making the process both quick and efficient. We are very pleased that we chose Twelve Capital.”

Daniel Grieger, Partner and Member of the Sourcing team of Twelve Capital, noted; “In structuring this transaction we were able to offer Alpha flexibility in the provision of solvency capital. Alpha is a sophisticated counterparty and we were pleased to work closely with their senior management throughout the process of tailoring this transaction for them.”

Chairman of Twelve Capital Dr. Urs Ramseier further added; “This transaction is a sterling example of what Twelve Capital is capable of doing for (re)insurance companies in their quest to meet Solvency II targets. We are convinced that there is substantial potential in the private debt market and the insurance industry. We are proud that Alpha Insurance has chosen us as their partner for this transaction.”