New $20.7m Dodeka I – 2015 private cat bond listed in Bermuda

A new private catastrophe bond transaction, Dodeka I – 2015, has been listed on the Bermuda stock exchange alongside a new program, the Kane SAC Limited ILS – Note Program, in the latest private ILS deal issued for Swiss ILS investment manager Twelve Capital.

Twelve Capital issued a number of Dodeka private cat bond transactions in 2014, as the ILS fund manager found a need to generate liquid securities out of reinsurance transactions it had collateralized.

By using the Kane SAC private ILS platform, operated by global independent insurance manager Kane, Twelve Capital can acquire transformed risk for its more liquid investment strategies and funds, even when the cat bond market alone is not providing the risk it needs.

This is useful for generating diversification, as well as for meeting specific mandates for liquidity either within its own multi-investor funds or as specified by a single investors mandate.

In 2014 Twelve Capital completed a number of these privately placed Dodeka catastrophe bonds, including Dodeka I in January 2014, Dodeka II in February 2014, Dodeka IV in June 2014 and Dodeka III in August 2014. All four of these transactions have now matured.

Yesterday, the Bermuda Stock Exchange announced the latest Dodeka listing. A new Kane SAC program was listed, the ILS Note Program, and the first series of notes from a segregated account, named Dodeka I – 2015 was also listed.

The Dodeka I – 2015 series of ILS notes have a due date of February 3rd 2016, so signify a one year transaction it seems. The exact size of the issuance is noted as $20.695m.

This could be considered a renewal, however it won’t be possible to discover who the ultimate sponsor is as that won’t be disclosed, and in fact this could be a completely different cedent anyway.

All of the previous Dodeka private cat bonds were transformed from industry-loss warranty (ILW) derivative contracts and so used PCS industry loss triggers. We don’t know as yet what the underlying structure is here, but it is likely to again be an ILW as they do provide the simplest transactional features for transformation making them the most cost-effective way to acquire risk in a liquid securities form.

By listing the $20.7m of Dodeka I – 2015 notes on the Bermuda Stock exchange Twelve Capital can enhance the notes liquidity, providing the ILS manager with improved options and additional transparency to trade the notes on the secondary cat bond market. As a result the notes will also be able to be priced by a number of ILS broker desks, giving the market visibility of their pricing and increasing options for liquidity and transferability should Twelve Capital need them.

Dodeka I – 2015 has been added to the Artemis Deal Directory and we will update you should further details on the underlying structure emerge.