Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

$50.2m Kane SAC 2015-1 private cat bond redeemed early & delisted


According to an update from the Bermuda Stock Exchange (BSX) a $50.2m private catastrophe bond transaction issued through the Kane SAC Limited Note Program was redeemed early in January and has now been delisted from the exchange.

The Kane SAC Limited (Series 2015-1) private ILS deal was issued in February 2015 and likely involved an ILS fund managers collateralised participation in a reinsurance program being securitised into note form.

According to the BSX, the notes were redeemed in full on the 8th January 2016, approximately 3 months early as they would have been due on the 7th April. The announcement today is due to the notes voluntary delisting from the exchange.

Of course there are many potential reasons for an early redemption clause to be requested and actioned, from the desire of the cedent to close down the transaction early in order to shift the protection to another contract or deal, to the investors wanting to redeem early in order to free up capital, or due to costs associated with the transaction maintenance increasing.

Typically penalties can apply on either side, although some early redemption clauses can be negotiated or penalty free.

There is also a slim possibility that loss development could be something to do with it, of course, as contracts can be redeemed early in order to settle transactions, particularly where aggregate layers are concerned and there is an expectation that they face a loss. However in this case we have not heard anything to indicate that to be the case.

Should we hear anymore about the reason for the redemption we will update you.

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