Swiss Re Insurance-Linked Fund Management

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Alpha Terra Validus III

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Alpha Terra Validus III – At a glance:

  • Issuer: Alpha Terra Validus III
  • Cedent / sponsor: Terra Brasis Re
  • Placement / structuring agent/s: ?
  • Risk modelling / calculation agents etc: ?
  • Risks / perils covered: Latin American property catastrophe risks
  • Size: $5m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Jan 2019

Alpha Terra Validus III – Full details:

This is the third issuance of an Alpha Terra Validus private catastrophe bond, which is an arrangement between Brazilian reinsurer Terra Brasis Re and now AIG owned AlphaCat Managers Ltd, the specialist insurance-linked securities (ILS) arm of Validus.

The latest renewal transaction for 2019 has again been issued using the Aon Insurance Managers owned White Rock Insurance (SAC) Ltd. Class 3, Class C and segregated accounts reinsurance company.

The reinsurance vehicle, acting on behalf of a segregated account named Alpha Terra Validus III, has issued $5 million of Alpha Terra Validus III principal at-risk zero coupon notes, which will be due for maturity on the 15th January 2020. The $5 million of notes have been listed on the Bermuda Stock Exchange (BSX) and placed with qualifying investors, which will have been certain ILS funds managed by AlphaCat Managers.

The $5 million of notes will provide a one year source of retrocessional reinsurance protection to Terra Brasis Re, covering it for losses from certain Latin American property catastrophe risks, likely earthquake exposures we understand. We also understand that this is an indemnity triggered private cat bond.

Being a zero coupon note arrangement, the Alpha Terra Validus III private cat bond will have seen the cedent funding the premium upfront, which offers a kind of leverage to the investor, like a collateralized reinsurance arrangement.

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