JLTCM in $78.7m Market Re 2016-2 FHCF replacement cat bond

by Artemis on June 10, 2016

The Jardine Lloyd Thompson Capital Markets (JLTCM) team has successfully completed its largest Market Re privately placed catastrophe bond to date, with the announcement of a $78.7m Market Re Ltd. (Series 2016-2) deal for a repeat sponsor.

The $78.7m of Series 2016-2 notes issued by JLTCM’s (the capital markets unit of reinsurance broker JLT Re) private cat bond issuance platform Market Re are exposed to Florida named storm risks and will provide the unnamed sponsor, which has used the Market Re platform before, with a source of collateralized reinsurance protection designed as a replacement layer for some of its Florida Hurricane Catastrophe Fund (FHCF) coverage.

“We are glad to see repeat issuance through our Market Re platform. It gives our clients the ability to access capital markets, which is especially important as the capital markets’ role has become a critical component of a comprehensive risk transfer,” Rick Miller, Managing Director and Co-Head of Insurance-Linked Securities at Jardine Lloyd Thompson Capital Markets explained.

“We are thrilled to further grow and expand our Market Re platform,” added Michael Popkin, Managing Director and Co-Head of Insurance-Linked Securities at Jardine Lloyd Thompson Capital Markets. “Our close working relationship with JLT Re’s brokerage team has further increased our ability to provide our clients with meaningful risk transfer solutions.”

The $78.7m of notes will provide the sponsor with a one-year source of fully collateralized, indemnity based, catastrophe reinsurance coverage for its Florida book of business. The single class of notes was privately placed with ILS investors and will sit alongside the ceding companies FHCF coverage.

This Market Re 2016-2 transaction has been structured as a zero coupon, one year note. The $78.7m of Class A notes issued represent $83,991,462 of limit, which equates to an implied Net rate-on-line against this limit of around 6.3%.

CEO of JLT Re North America and JLTCM, Ed Hochberg, commented that “clients are enthusiastic about the success of Market Re, which is reflected not only through repeat issuance, but also through the incrementally larger deal size.”

As the largest Market Re issuance to date, this deal shows the ceding companies increasing interest in leveraging insurance-linked investor capital and the catastrophe bond structure in a more efficient manner.

With platforms like Market Re becoming increasingly popular and a regular feature at reinsurance renewals, the privately placed cat bond is being well-utilised both directly by cedants, as well as by investors looking for a liquid source of securitised risk.

It’s also worth noting that with this being a Market Re 2016-2 private cat bond and the first this year from the platform, there is likely a Market Re 2016-1 still to come.

You can read all about the $78.7m Market Re Ltd. (Series 2016-2) privately placed catastrophe bond in the Artemis Deal Directory, where you can also read details of every private cat bond that the JLTCM team has brought to market.

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