Jardine Lloyd Thompson Capital Markets (JLTCM), the investment banking and ILS structuring & issuance team of the reinsurance brokerage JLT Re, has successfully structured and placed another private catastrophe bond transaction, a $65.1 million Market Re Ltd. (Series 2017-1) transaction for a Florida sponsor.
The JLTCM team has now completed eleven private cat bond, or cat bond lite, transactions using its Market Re platform, which helps sponsors and investors transact insurance risk in securitized form, efficiently.
This latest transaction sees a Florida focused transaction, with the private placement of $65.1 million of Series 2017-1 notes issued by Market Re Ltd., with the deal providing one year of collateralized reinsurance protection for a cedent’s Florida book of insurance business.
JLTCM said that the transaction had one class of notes and was placed with the private capital markets alongside the cedent’s Florida hurricane catastrophe coverage (FHCF), which suggests that the underlying peril is Florida named storm risk.
“Our Market Re platform continues to provide our clients with competitive access to the capital markets,” commented Michael Popkin, Managing Director and Co-Head of Insurance-Linked Securities at Jardine Lloyd Thompson Capital Markets.
“Our client has again successfully accessed the capital markets for an FHCF replacement layer,” added Rick Miller, Managing Director and Co-Head of Insurance-Linked Securities at Jardine Lloyd Thompson Capital Markets.
This is an important point, as Florida based cedent’s are increasingly turning to the capital markets as a source of efficient risk capital to help them reduce their participation in the FHCF.
With the capital markets able to provide reinsurance at such efficient pricing and execution levels, numerous sponsors are reducing their FHCF coverage, as we see with this private Market Re cat bond deal.
Miller’s comment also suggests that this could be a renewal transaction, perhaps for the Market Re Ltd. (Series 2016-4) deal from a year ago, which as it was only $25 million in size would suggest a significant increase in confidence in the capital markets from the cedent.
CEO of JLT Re North America and JLTCM, Ed Hochberg, also said; “JLTCM continued to work closely with JLT’s brokers to provide innovative and integrated solutions to our clients.”
With eleven cat bond issues now under their belt, the JLTCM’s team’s Market Re platform has brought ILS investors a regular and significant amount of risk to invest in, while also offering smaller U.S. ceding companies a way to access collateralized reinsurance capacity from the capital markets more efficiently.
Such privately placed cat bonds (or cat bond lites) can play a vital role for both the sponsors, and the ILS investors or fund managers who back the deals as they search for more securitised product. As an efficient way to access the capital markets, in order to source fully collateralised reinsurance protection, private cat bond platforms are an increasingly important tool for risk transfer buyers.
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