Twelve Capital completes $19.5m Dodeka XI cat bond lite

by Artemis on January 9, 2017

Twelve Capital, the Zurich headquartered specialist insurance and reinsurance linked investment and ILS fund manager, has completed a $19.5 million Dodeka XI private catastrophe bond issuance, its thirteenth cat bond lite transaction to date.

Twelve Capital has been regularly using the private catastrophe bond, or cat bond lite, in order to transform reinsurance contracts into a liquid, tradable security to meet certain of its investment fund mandates.

This near $19.5 million Dodeka XI is the thirteenth such deal from Twelve Capital, as the insurance-linked securities (ILS) fund manager demonstrates its continued commitment to sourcing risk in cat bond form for its investor clients.

Dodeka XI has been issued using the Artex SAC Limited ILS Note Program II vehicle, with Dodeka XI representing a single segregated account that has been transformed into private cat bond form resulting in the issuance of $19.451 million of tradable principal at risk ILS notes.

The $19.451 million of Dodeka XI insurance-linked notes are due on the 5th January 2018, so likely represent an annual reinsurance or retrocession contract, possibly covering U.S. property catastrophe risks (as other Dodeka’s have) over the next year.

To date, the Dodeka series of private cat bond transactions have featured an industry loss warranty (ILW) reinsurance or retrocession contract, which Twelve Capital has transformed, securitised and listed on the Bermuda Stock Exchange (BSX) in order to place the private reinsurance transaction into the liquid ILS risk market.

The process enables an ILS investment manager, like Twelve, to access insurance risk in a form that fits certain of ILS fund mandates, or private investor mandates, where only ILS securities with secondary liquidity are appropriate.

The $19.451 million of Dodeka XI notes have been admitted to the BSX as Section V Insurance Related Securities with Estera Securities acting as sponsor, and placed with qualified investors.

As with all Dodeka’s so far, we assume that the Dodeka XI cat bond lite sees a transformed industry-loss warranty (ILW) contract, using a PCS industry loss trigger, covering U.S. natural catastrophe perils, issued. However at this time we cannot 100% confirm this.

Previous Dodeka private cat bond transactions from Twelve Capital include: Dodeka I in January 2014, Dodeka II in February 2014, Dodeka IV in June 2014, Dodeka III in August 2014, Dodeka I – 2015 in February 2015, Dodeka V in May 2015, Dodeka VI in June 2015, Dodeka VII in July 2015, Dodeka VIII in June 2016, Dodeka V-2016, Dodeka IX and Dodeka X all in July 2016.

The Dodeka XI privately placed catastrophe bond has been added to the Artemis Catastrophe Bond Deal Directory and we will update the listing should any additional details on the underlying structure emerge.

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