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Randolph Re (Series 2023-3)

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Randolph Re (Series 2023-3) – At a glance:

  • Issuer: White Rock Insurance (SAC) Ltd.
  • Cedent / sponsor: Mercury Insurance
  • Placement / structuring agent/s: Aon Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: Unknown
  • Risks / perils covered: California wildfire
  • Size: $45m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Jul 2023

Randolph Re (Series 2023-3) – Full details:

This is the fifth insurance-linked securities (ILS) transaction to come to light from Aon’s Randolph Re private catastrophe bond issuance and placement platform.

We’ve learned that this 2023-3 issuance from Randolph Re covers wildfire risks again, like three previous Randolph Re deals.

Also, given similarities in issuance and maturity dates we suspect the sponsor will again have been California focused P&C carrier Mercury Insurance.

Aon’s private catastrophe bond platform Randolph Re has completed a new issuance of $45 million of Randolph Re (Series 2023-3) private cat bond notes that are exposed to wildfire risks.

Private placement cat bonds through Randolph Re are issued using a cell of Aon’s special purpose vehicle White Rock Insurance (SAC) Bermuda Ltd. and the brokers’ insurance management unit Aon Insurance Managers services the transactions.

This fourth Randolph Re wildfire exposed private cat bond issuance saw Aon’s White Rock Insurance (SAC) Ltd., acting on behalf of its segregated account Randolph Re 2023-2 and under the Randolph Re Program, to issue $45 million of Series 2023-3 notes.

The Series 2023-3 insurance-linked notes issued by Randolph Re are due as of July 7th 2024, which ties in very closely with the three previous deals, as all had a July 6th maturity date.

As a result, given the wildfire nature of the exposure and the dates lining up so closely, we suspect this latest Randolph Re private cat bond supports a one-year fully collateralised reinsurance agreement that has been securitised for the cedent, which is again likely to be Mercury Insurance.

The previous deals all provided the cedent with wildfire reinsurance protection focused on California, covering fire losses following an earthquake as well and were structured to provide per-occurrence reinsurance on an indemnity trigger basis.

We’re also told that the notes are zero-coupon in nature and that the pricing indicated a spread equivalent of roughly 7%, although the exact figures are not available to us.

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