Zurich headquartered insurance-linked securities (ILS) and reinsurance linked investment manager Twelve Capital has now completed its 25th private catastrophe bond deal, bringing a $9.33 million Dodeka XXIII to market.
The latest in the Dodeka series of transactions has been issued around the June reinsurance renewal, but appears to be specific to the U.S. hurricane season, given its shorter duration of only six months.
The series of private cat bond or insurance-linked securities (ILS) provide Twelve Capital a mechanism to securitise underlying reinsurance or retrocessional risks into securitised cat bond form, to suit its more liquid ILS funds or private investor ILS mandates.
These transactions demonstrate the ILS fund managers’s commitment to sourcing reinsurance risks in securitised cat bond form for its ILS fund investors.
As privately arranged and placed insurance-linked securities (ILS) deals, these Dodeka transactions provide the ability to transform property catastrophe reinsurance and retrocession risks, typically an industry-loss warranty (ILW), into an investable form suited to more liquid cat bond fund mandates.
This latest Dodeka XXIII transaction saw $9.33 million of notes issued and then listed on the Bermuda Stock Exchange (BSX), which further enhances the liquidity of the resulting notes for investors or specific mandates.
The transformer and issuing vehicle is the Artex SAC Limited vehicle, which is domiciled in Bermuda and managed by Artex and has been involved in every Dodeka private cat bond arrangement to-date.
The vehicle acted in respect of a Segregated Account named Dodeka XXII to issue the $9.33 million of ILS notes.
The Dodeka XXIII private cat bond appears to only cover a six month term, with maturity of the notes due January 20th 2020.
So, while full details on these transactions are never available, given the private nature of the Dodeka ILS deals, we can make some assumptions.
We assume that these transactions have likely featured a transformed industry-loss warranty (ILW) providing reinsurance or retrocession to an unamed ceding company, given the ease with which they can be transformed, most likely securitizing U.S. property catastrophe risks.
In this case believe the transaction likely covers U.S. wind related risks, so tropical storms and hurricanes, given the risk period runs from June 1st to the end of the year, so covering one full hurricane season.
Together, Twelve Capital’s Dodeka private cat bond transactions amount to almost $500 million of risk capital issued since 2014, a significant commitment to sourcing more liquid risk for its cat bond funds and mandates. Details on every Dodeka private cat bond transaction can be found in the Artemis Catastrophe Bond Deal Directory.
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