Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

$20m Eclipse Re Ltd. private cat bond issued around April renewal


The Horseshoe managed private catastrophe bond and insurance-linked securities (ILS) issuance and risk transformation vehicle Eclipse Re Ltd. has completed a second issuance of 2020, a $20 million Eclipse Re Ltd. (Series 2020-02A) transaction that came to market around the April reinsurance renewal.

EclipseHorseshoe’s Eclipse Re was one of the most prolific private cat bond platforms of 2019, responsible for some $300 million or so of private insurance-linked securities (ILS) arrangements, a doubling of its 2018 activity.

As a result, the Eclipse Re private cat bond transformer and issuance vehicle saw significantly more use in 2019 than in previous years, helped by the fact that the specialist cat bond and ILS fund manager Fermat Capital Management has become a significant user of the platform for some of its risk transformation deal flow.

Securitisation of insurance and reinsurance risk remains strongly in demand, so the Eclipse Re vehicle is expected to have another busy year in 2020 and is actually one deal ahead of last year already.

In 2019 Eclipse Re’s first private cat bond was a $20 million Eclipse Re 2019-01A that came to market around the April 1st reinsurance renewal. We assume that this new cat bond from the platform is a renewal of this arrangement.

Details on every Eclipse Re private cat bond can be found in our catastrophe bond Deal Directory.

This second private cat bond of 2020 from Eclipse Re saw $20 million of notes issued, which were placed with qualified institutional investors or a group of investors.

This could be a deal for a single ILS fund manager, such as Fermat, transforming risks underwritten into liquid catastrophe bond note form for an investment fund strategy, given these private deals are often bilaterally arranged.

Eclipse Re provides a platform for the market where insurance-linked securities (ILS) funds or investors can engage in reinsurance and retrocession contracts more directly with ceding companies, but still benefit from a risk transfer arrangement that is transformed and securitized into private cat bond form.

The proceeds from the sale of these notes will have been used as collateral to underpin related reinsurance or retrocession contracts.

This $20 million Eclipse Re Ltd. (Series 2020-02A) transaction saw special purpose Bermudian insurer Eclipse Re Ltd. issuing one tranche of Series 2020-02A notes from its segregated account SAC EC0027, with the notes having a due date of April 1st 2021.

As a result, we assume the issued private cat bond notes represent a one-year reinsurance or retrocession arrangement, likely entered into at the April renewal season. Hence they could feature Japanese property catastrophe risks, which feature heavily in April, but they could also be from a U.S. national account as some of those also renew.

The single $20 million tranche of notes issued by Eclipse Re has been admitted for listing on the Bermuda Stock Exchange (BSX) as insurance related securities.

Leading ILS and reinsurance market service provider and facilitator Horseshoe Group is the lead for these Eclipse Re transactions, given it manages the special purpose vehicle as part of its offering to clients.

Platforms like Eclipse Re benefit ILS fund managers and investors by channelling reinsurance or retrocession arrangements through a risk transformation and securitisation platform like Eclipse Re, investable notes suited to a more liquid ILS fund strategy can be secured.

We’ve added this $10 million Eclipse Re Ltd. (Series 2020-02A) private catastrophe bond to the Artemis Deal Directory.

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