The recently completed $5 million Alpha Terra Validus II private catastrophe bond transaction is another step in the development of a Latin American insurance-linked securities (ILS) marketplace, according to the sponsor of the deal reinsurance firm Terra Brasis Resseguros S.A. (Terra Brasis Re).
The transaction, which we first covered back in January when it originally came to light, was sponsored by Latin American reinsurance firm Terra Brasis Re and underwritten as well as invested in by AlphaCat Managers, the insurance and reinsurance linked investment unit of Validus Group.
The deal saw AlphaCat Managers sourcing risk from cedent Brazilian headquartered reinsurance firm Terra Brasis Re which were then transformed into ILS notes for the AlphaCat funds to invest in, so providing a very rare securitisation of Latin American property catastrophe risks.
Commenting on the arrangement, Rodrigo Botti, Director of Terra Brasis Re, said, “ILS based solutions are gaining momentum in Latin America, with recent issuances of different size and scope. We are pleased that our close partnership with AlphaCat continues to contribute to the development of this technology in the region.”
It’s an important step in the growth of ILS in Latin America, to see such smaller transactions gaining approval amongst the traditional insurance and reinsurance community, as well as by the regulator in the region.
Lixin Zeng, the CEO of AlphaCat, commented on the deal, “We are pleased to continue our successful partnership with Terra Brasis Re and look forward to working together in the future.”
The Alpha Terra Validus II cat bond is a renewal of the 2017 Terra Brasis Validus I transaction, a unique offering of Latin American reinsurance risk on an indemnity trigger basis.
The 2018 transaction was again issued through a segregated account of White Rock Insurance (SAC) Ltd., managed by Aon Insurance Managers (Bermuda) Ltd.