Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Market Re Ltd. (Series 2014-2)

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Market Re Ltd. (Series 2014-2) – At a glance:

  • Issuer: Market Re Ltd. (Series 2014-2)
  • Cedent / sponsor: Unknown
  • Placement / structuring agent/s: Jardine Lloyd Thompson Capital Markets are structuring agent and bookrunner
  • Risk modelling / calculation agents etc: Participating investors undertook their own risk modelling
  • Risks / perils covered: Florida named storms
  • Size: $31.825m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Jun 2014

Market Re Ltd. (Series 2014-2) – Full details:

Market Re 2014-2 was structured, arranged and marketed by JLT Capital Markets, who continues to provide smaller, or new cedants with a way to access the capital markets through catastrophe bonds.

At $31.825m, this second Market Re private cat bond issue is much larger than the first, showing that the Market Re platform already looks to be gaining traction so soon after its launch in May.

This second Market Re 2014-2 private cat bond provides its sponsor with a one year source of indemnity-based collateralized catastrophe reinsurance coverage for its Florida book of business for the peril of named storms.

The transaction features two tranches of notes. A $4.525m Class A tranche of notes provides the cedant with multi-section reinsurance coverage of a top/drop nature. A $27.3m Class B tranche of notes provides second-event protection to the cedant.

The transaction is again achieved in a zero coupon format, like so many other JLTCM arranged private cat bonds, with investors performing their own risk analysis in order to become comfortable with the risks involved.

Insurance-linked securities investors will see the Market Re development as a positive for the market, with the potential to bring a significant additional chunk of investment capacity to those investors seeking catastrophe bond opportunities.

With JLTCM targeting smaller sponsors, or those new to cat bonds, any risk capital committed is likely additional to the typical cat bond market pipeline of 144A broadly marketed deals. Therefore these private issuance facilities have the potential to help the overall ILS market grow, particularly important in the current market environment.

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