ILN SAC Ltd. (ILN-TKY-Q-1)

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ILN SAC Ltd. (ILN-TKY-Q-1) – At a glance:

  • Issuer: ILN SAC Ltd.
  • Cedent / sponsor: Unknown
  • Placement / structuring agent/s: Unknown
  • Risk modelling / calculation agents etc: Unknown
  • Risks / perils covered: Turkey earthquake
  • Size: $7m
  • Trigger type: Industry loss index
  • Ratings: NR
  • Date of issue: Feb 2020

ILN SAC Ltd. (ILN-TKY-Q-1) – Full details:

We’re told that the deal features an industry loss based transaction that transfers the risk associated with $7 million of Turkish earthquake exposure and securitizes it into insurance-linked note form.

We understand this is the first “transformer series” transaction issued through the platform, as it securitised a traditional reinsurance contract and transformed it into securities (insurance-linked notes).

Turkish earthquake is the underlying peril and the arrangement will provide the cedent with $7 million of aggregate industry loss based protection, but structured to provide linear coverage which is seen as an innovative use of the industry loss trigger.

We also understand that the deal featured a cedent that is completely new to the insurance-linked securities (ILS) market.

We’re told the execution was highly cost-effective and efficient, resulting in fully tradable ILN Programme notes.

Tullett Prebon’s deal team was led by Steve Emmerson, while Artex Risk Solutions provided insurance management services and specific expertise in risk transformation.

Tullett Prebon has a dedicated insurance-linked securities (ILS) vehicle to support deal-flow from its ILN platform, having registered a Bermuda based special purpose vehicle, a segregated accounts structure, named ILN SAC Ltd. which is managed by Artex.

Two tranches of notes have been issued by ILN SAC Ltd., both of which were admitted for listing on the Bermuda Stock Exchange (BSX) as insurance related securities.

ILN SAC Ltd. has issued a $6.699 million tranche of Class PS notes Series 1 Transformer and a $301,000 tranche of Class PB notes, which correspond to the buyer and seller protection notes that the ILN platform produces for each of its transactions (PS being seller notes notes, PB being buyer).

Both tranches, so the full $7 million of notes, are due for maturity on February 10th 2021, suggesting the underlying industry loss based reinsurance or retrocessional protection is for roughly one year.

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