New $34m Resilience Re private cat bond issued on Willis platform

by Artemis on June 9, 2016

Insurance, reinsurance and capital markets broker and advisory Willis Towers Watson’s private catastrophe bond platform has produced another deal, with the completion and listing in Bermuda of a $34m Resilience Re Ltd. (Series 1661A) transaction.

Willis Capital Markets & Advisory (WCMA), the brokerages investment banking, catastrophe bond and ILS expert unit, launched the Resilience Re Ltd. private cat bond platform in order to provide clients with a lower-friction option to access the capital markets.

This $34m Series 1661A transaction is now the third from the Resilience Re platform that we have received some information on and listed in our Deal Directory.

Back in January the platform was used to transform a collateralised reinsurance signing from the California Earthquake Authority’s (CEA) reinsurance renewal, resulting in the $57m Resilience Re Ltd. (Series 15121A).

That was followed in April by a larger $85m Resilience Re Ltd. (Series 1642B) transaction, which again transformed a collateralised reinsurance contract as part of the CEA renewal, enabling an ILS investor to participate and secure liquid, securitised notes.

So, again there is a chance that this $34m Resilience Re private cat bond has a link to the CEA’s reinsurance program, but we cannot be sure hence the transaction is simply listed as being exposed to property catastrophe risks and we will update you should any further details emerge.

The notes listed on the Bermuda Stock Exchange (BSX), for this $34m Resilience Re Ltd. (Series 1661A) transaction, have been, like the last Resilience Re deal, structured as discounted zero coupon participating notes.

This likely reflects the transformation of a collateralised reinsurance deal, with the coupon having been paid upfront as premium and the notes hence discounted and issued in order to provide an investor (or investors) with liquid securitised access to the underwritten risk.

The $34m of notes issued have a due date of June 2nd 2017, so represent a single annual reinsurance contract likely from the recent June reinsurance renewal. As a result, it seems safe to assume that these notes are exposed to property catastrophe reinsurance risks (likely U.S.), but of what type we do not currently know.

The Resilience Re platform enables a syndicated deal marketing process, which can be used alongside the traditional reinsurance placement process or as a standalone way to access the capital markets. In this case it’s likely a standalone use of the platform for a single investor (likely an ILS fund manager or large institution) to access the risk in a liquid, securitised form.

This does seem to be the main use-case for the private cat bond or cat bond lite platforms, however they can also provide ceding companies a lower-cost way to build and maintain relationships with ILS and cat bond investors, even if not doing a full-blown 144A broadly marketed issuance.

With the listing on the BSX, investors in this $34m Resilience Re Ltd. (Series 1661A) private catastrophe bond will benefit from enhanced secondary liquidity in the notes.

Willis Capital Markets & Advisory will have played the joint roles of structuring agent and bookrunner for this private cat bond deal.

We will update you should any further information about the sponsor or underlying perils featured in this new Resilience Re deal become available.

You can read all about this and every other catastrophe bond in the Artemis Deal Directory.

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