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Artex SAC Limited – Silver Crane Notes

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Artex SAC Limited – Silver Crane Notes – At a glance:

  • Issuer: Artex SAC Limited
  • Cedent / sponsor: Toa Re Europe
  • Placement / structuring agent/s: Unknown
  • Risk modelling / calculation agents etc: RMS
  • Risks / perils covered: European windstorm, European earthquake, Mediterranean earthquake
  • Size: $25m
  • Trigger type: Industry loss index
  • Ratings: NR
  • Date of issue: Jan 2022

Artex SAC Limited – Silver Crane Notes – Full details:

The Artex Risk Solutions owned segregated account reinsurance transformer platform, Artex SAC Limited, has completed issuance of a new private catastrophe bond, with a $25 million Artex SAC Limited – Silver Crane Notes transaction coming to market.

Artex’s SAC Limited vehicle is domiciled in Bermuda and facilitates private cat bond transactions for sponsors and investors.

The structure acts as a transformer for the risks and a securitization vehicle that issues notes, which can then be sold to either individual or groups of investors, depending on whether a transaction is syndicated or more bilateral in nature.

This private cat bond issuance (also termed a cat bond lite) has been completed and listed in Bermuda using the vehicle’s Artex SAC Limited ILS Note Program II.

This new issuance features $25 million of Artex SAC Limited – Silver Crane Notes, with the notes due January 17th 2025.

As we normally do with these private cat bond issuances, we presume this consists of notes linked to certain property catastrophe risks, most likely representing a securitisation of either an indemnity or industry loss triggered collateralised reinsurance or retrocession transaction.

The arrangement will have been securitised, using the Artex structure, in order to make the investment compatible with certain ILS fund or investor mandates, often also providing the investors an option to benefit from secondary liquidity as well.

This Silver Crane private cat bond transaction consists of $25 million of notes that were issued using the Artex SAC Limited vehicle and its ILS Note Program II, on behalf of a segregated account series named Silver Crane.

The notes have been placed with qualified investors and listed on the Bermuda Stock Exchange (BSX) as insurance related securities.

Update:

Toa Re Europe sponsored this Silver Crane private catastrophe bond deal.

The $25 million of notes issued will provide Toa Re Europe with a source of retrocessional reinsurance from the capital markets, covering European windstorm and earthquake risks, as well as earthquakes around certain Mediterranean locations.

The notes have a three-year term, Toa Re Europe explained and the transaction is a renewal of a ‘Blue Crane’ arrangement a year ago, which was an ISDA-derivative with a one year term that was placed bilaterally in 2021.

The underlying is an industry loss warranty (ILW) based on an index covering seven per-occurrence layers, designed to protect Toa Re Europe against European windstorms, as well as certain earthquake scenarios, for example covering regions around the Mediterranean Sea and continental Europe.

Each layer is geared towards an annual expected loss of around 1.0% each and the transaction was structured in a modular way as a synthetic quota share, bundling together what is a unique and diversifying set of independent natural catastrophe scenarios into a transparent index, Toa Re Europe explained.

The Silver Crane notes issuance benefited from structuring and distribution support from independent consultant RHA Advisory, run by ILS specialist Rom Aviv in Tel Aviv, Israel, working in collaboration with Bank Vontobel (Zurich, Switzerland) who also acted as Arranger for the transaction. RMS acted as risk modeller.

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