Limestone Re notes from Liberty Mutual sidecar listed on the BSX

by Artemis on December 28, 2016

As part of the recent $160 million Limestone Re Ltd. multi-year collateralised reinsurance sidecar-like transaction from insurer Liberty Mutual $85 million of participating notes have been listed on the Bermuda Stock Exchange (BSX).

Liberty Mutual announced the completion of its inaugural Limestone Re transaction on the 21st December, after the completion of a reinsurance transaction featuring U.S. property catastrophe, U.S. homeowners and London Market specialty insurance risks from the insurers businesses.

The transaction, effected through Bermuda domiciled segregated account company Limestone Re Ltd., was capitalised with $160 million from third-party investors to provide the insurer with a multi-year source of multi-class collateralized ‎reinsurance.

Now, $85 million of the deal has been listed on the BSX, in two tranches of participating notes, both of which had actually been admitted for listing on the 16th December although no announcement was made until after Liberty Mutual had revealed its reinsurance sidecar deal.

The first tranche features $72 million of Series 2016-1 Class A participating voting notes that were issued through a Limestone Re Segregated Account, with the notes due on 31st August 2021.

The second tranche features $13 million of Series 2016-1 Class A participating non-voting notes that were issued through a Limestone Re Segregated Account, with the notes due on 31st August 2021.

Both tranches of notes have been placed with qualified investors. The remaining $75 million of the collateralisation of Limestone Re has so far not been listed, so has perhaps been privately placed with third-party investors.

Liberty Mutual termed the Limestone Re transaction as a “key strategic initiative” explaining that it demonstrates investors interest in not just property catastrophe insurance investments, but also in “homeowners, marine and other global specialty insurance lines.”

Liberty also said that the Limestone Re sidecar showed its ability through its underwriting platform to “bring capital markets investors as close as possible to the underlying risks.”

The insurer now has a Bermuda segregated account company through which it can make regular issues of notes, if it chooses, to bring third-party investor capital within its global insurance business, providing the benefits of collateralised reinsurance efficiency and capital markets capital costs.

Collateralised reinsurance sidecars often feature a range of notes in different tranches, structured and designed to appeal to a larger range of investors with different needs.

For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.

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