Randolph Re (Series 2024-1)

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

Unlike previous Randolph Re deals brought to market by Aon, this one has been issued using its Guernsey based protected cell company White Rock Insurance Company PCC Limited.

We suspect this new $45.5 million Randolph Re 2024-1 private cat bond is likely to be a renewal of previous deals that featured reinsurance of wildfire risks for California headquartered property casualty insurer Mercury Insurance.

Private placement cat bonds from the Randolph Re program are issued using a cell of Aon’s White Rock special purpose vehicle, in this case the Guernsey structure, while the brokers’ insurance management unit Aon Insurance Managers services the transactions and Aon Securities acts as structuring agent and bookrunner.

Mercury Insurance is a P&C specialist insurer that underwrites a large portfolio of property risk in certain wildfire exposed parts of California, as well as other states, and has been utilising the ILS market to source reinsurance capacity for a number of years.

This use of ILS capacity developed into accessing the catastrophe bond market using Aon’s Randolph Re issuance platform, to secure a slice of the wildfire protection required through private cat bonds.

This, what we believe to be, fifth Randolph Re wildfire exposed private cat bond issuance saw Guernsey domiciled White Rock Insurance Company PCC Limited, acting on behalf of its segregated account Randolph Re 2024-1 and under the Randolph Re Program, to issue $45.5 million of Series 2024-1 notes.

The Series 2024-1 insurance-linked notes issued by Randolph Re are due as of July 7th 2025, which is the same maturity date as the 2023 deal that provided wildfire cover to Mercury.

As a result, given how the dates align, we suspect this latest Randolph Re private cat bond provides a one-year fully collateralised reinsurance agreement that has been securitised for the cedent, which as said we suspect to again be Mercury Insurance.

Previous deals in that series for Mercury all provided the cedent with wildfire reinsurance protection focused mainly on California, covering fire losses following an earthquake as well, and were structured to provide per-occurrence reinsurance on an indemnity trigger basis.

Update post-January 2025 California wildfires:

The Randolph Re 2024-1 private cat bond notes have been marked down for bids of just 10 cents on the dollar suggesting that Mercury could make a reinsurance recovery from them. We understand no recovery has been made at this stage, but with maturity due in early July these notes could get extended for a later maturity, or perhaps even a payout occur prior to that, given the heavy mark-down.

Update – July 2025:

Mercury’s losses from the California wildfires exceeded the attachment point for the Randolph Re 2024-1 private catastrophe bond.

By July 8th the principal of the cat bond had been reduced to $25.45 million, indicating a $20.05 million reinsurance recovery had been made by Mercury.

The remaining notes were marked for bids of 5 and offers of 15 after the principal reduction.