Arch Capital Group, the Bermuda headquartered insurance and reinsurance specialist, has returned to the capital markets to sponsor an almost $70 million renewal sidecar issuance through its special purpose insurer Voussoir Re Ltd.
Voussoir Re Ltd. was first registered in Bermuda in 2019, as a special purpose insurer and segregated accounts vehicle established for collateralised reinsurance arrangements and issuance of insurance-linked notes to investors.
Back in 2019, we reported a first $74 million issuance of notes by Voussoir Re Ltd., a collateralised reinsurance sidecar style vehicle that we understood to have been established by Arch Capital, a new third-party capital backed venture for the company.
Arch then returned in 2020 with a second $76.5 million issuance from its Voussoir Re sidecar vehicle, featuring a $20 million Class A tranche of Series 2020-1 notes and a $56.5 million Class B tranche.
A third transaction has now come to light, which we assume to be a nearly $70 million 2021 renewal for the Voussoir Re sidecar structure.
Voussoir Re Ltd. has issued a single $69.92 million tranche of Series 2020-1 Class B participating notes, which have been sold to capital market investors and the proceeds used to collateralize a reinsurance agreement.
The Class B participating notes issued to investors are due March 1st 2024.
We assume that, as in previous years, the Voussoir Re sidecar issuance features a securitization of property catastrophe reinsurance risks from Arch Capital’s book, providing the re/insurer with a route to tap capital market investor appetite to support its underwriting business.
We assume the underlying reinsurance agreement is a quota share, as would be typical of any reinsurance sidecar. However, we cannot confirm this fact as transaction details are limited with these Voussoir Re issuances.
The $69.92 million of capital raised from the sale of Series 2021-1 notes issued by Voussoir Re will presumably have been used to collateralise a quota share across a portfolio of reinsurance business, to the benefit of sponsoring re/insurer Arch Capital.
Voussoir is an architectural term, meaning a tapered stone used within the construction of an arch.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.