Flurry of Bermuda SPI registrations in December takes 2016 total to 17

by Artemis on January 27, 2017

Bermuda saw a flurry of special purpose insurance (SPI) vehicle registrations in December, which took the total registered for catastrophe bond issuance and other collateralised reinsurance structures to seventeen for the full-year 2016.

In December 2016 there were seven new Bermuda SPI vehicles registered, with the majority set to be used as collateralised reinsurance vehicles or sidecar-like structures, and one clearly a catastrophe bond.

2016 saw a lower number of SPI’s registered than the prior year, a natural effect of a market where there are now multiple reusable cat bond issuance vehicles, meaning that sponsors have not needed to register as many each year.

In fact there were an amazing 51 SPI’s registered in Bermuda in 2013, the most in any single year, followed by 28 new SPI’s in 2014, then 20 new SPI’s were registered in 2015 and now the 17 in 2016, reflecting the fact these are multi-use vehicles which can benefit a sponsor over a number of years.

In December the majority of new SPI registrations were for vehicles launched to act as collateralised reinsurers or reinsurance sidecars.

Among these were the Fibonacci Re vehicle from RenaissanceRe, an SPI named Hiscox Re ILS Ltd. which is a collateralised reinsurance vehicle used by the Hiscox ILS team, Leo Re Ltd. which was funded by a Dutch pension fund, insurer Liberty Mutual’s Limestone Re Ltd., a new vehicle from reinsurer Partner Re names Mercalli Re Ltd. and an as yet unknown Daedalus I Re Ltd.

On the catastrophe bond side the only vehicle registered in December that turned out to be a cat bond issuer was XL Catlin’s Galilei Re Ltd. which issued the Galilei Re Ltd. (Series 2016-1) and Galilei Re Ltd. (Series 2017-1) transactions.

The only other registration of note for the alternative reinsurance market in December was the Class 4 reinsurer named Kayla Re Ltd., which is of course the re-named Aligned Re total-return reinsurance venture from Enstar.

According to the Bermuda Monetary Authority (BMA) there were a total of 42 new re/insurers registered in 2016 and 17 re/insurance intermediaries.

Bermuda continues to be the domicile of choice for insurance-linked securities (ILS) and collateralised reinsurance vehicles, although with the ILS market continuing to grow sponsors are looking further afield and other domiciles are enhancing their offerings. However this is a positive sign, as complimentary offerings and more choice can only be a good thing for market participants.

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