Mangrove Risk Solutions Bermuda Ltd. (Series 2024-C)

A fourth privately issued and placed insurance-linked security (ILS), or private catastrophe bond issuance, has come to light from the Mangrove Risk Solutions Bermuda Ltd. platform that is operated by Marsh McLennan and reinsurance broker Guy Carpenter.

This latest private cat bond or ILS issued by Mangrove Risk Solutions Bermuda Ltd. is a Series 2024-C transaction.

Mangrove Risk Solutions Bermuda Ltd. has issued just over $14.35 million of discounted zero-coupon notes, on behalf of a segregated account 2024-C, with the notes sold to provide an investment for the collateral that underpins a reinsurance or retrocession agreement.

The $14.35 million of notes issued are due for maturity on June 13th 2025, suggesting this transaction provides reinsurance or retrocessional coverage for a term of under one-year. It may be related to a mid-year reinsurance renewal deal that has been transformed and securitized and just took time to come to market, or it may be a more recently placed reinsurance deal that runs for less than one year, we can’t be sure.

As with every private ILS or cat bond deal, until we learn more details we assume these cover property catastrophe reinsurance or retrocession risks.

With private cat bonds, sometimes the risks will have been transformed to enable an ILS fund or investor to source an asset that meets a catastrophe bond mandate, so a transformation from a traditional reinsurance or retro contract. Or, simply, so a cedant can access capital market investors for protection in a more efficient manner than undertaking a full 144A cat bond issuance process.

Private ILS or cat bond lite arrangements normally fit into one of a number of use-cases. Either as a straight collateralised reinsurance or retro cover for a carrier, that has been transformed and securitised, to be assumed by a single ILS fund or investor, or a small group of funds/investors.

Or, they can also represent ILS fund-to-fund transactions (hedging), or the transformation of a specific risk transfer arrangement, such as an industry-loss warranty (ILW).

Reinsurance broker Guy Carpenter’s specialist capital markets unit GC Securities will have structured the transaction and acted as a bookrunner for this Mangrove Risk Solutions private ILS transaction, while Marsh Management Services will have acted as the insurance manager for the vehicle itself, as has been seen with all the previous issuances under the Isosceles name.

Being a Bermuda vehicle, the notes have been listed on the Bermuda Stock Exchange (BSX), which is again an enhancement for liquidity.