The Artex Risk Solutions owned segregated account reinsurance transformer platform, Artex SAC Limited, has completed issuance of a new private catastrophe bond, with a $25 million Artex SAC Limited – Silver Crane Notes transaction coming to market.
This is the first private catastrophe bond arrangement of 2022 that we’ve seen, following on from a record year in 2021 for privately placed cat bonds and cat bond lites issues.
Artex’s SAC Limited vehicle is domiciled in Bermuda and facilitates private cat bond transactions for sponsors and investors.
The structure acts as a transformer for the risks and a securitization vehicle that issues notes, which can then be sold to either individual or groups of investors, depending on whether a transaction is syndicated or more bilateral in nature.
This private cat bond issuance (also termed a cat bond lite) has been completed and listed in Bermuda using the vehicle’s Artex SAC Limited ILS Note Program II.
This is the ninth transaction from Artex SAC Limited that we’ve listed in our Deal Directory.
This new issuance features $25 million of Artex SAC Limited – Silver Crane Notes, with the notes due January 17th 2025.
As we normally do with these private cat bond issuances, we presume this consists of notes linked to certain property catastrophe risks, most likely representing a securitisation of either an indemnity or industry loss triggered collateralised reinsurance or retrocession transaction.
The arrangement will have been securitised, using the Artex structure, in order to make the investment compatible with certain ILS fund or investor mandates, often also providing the investors an option to benefit from secondary liquidity as well.
This Silver Crane private cat bond transaction consists of $25 million of notes that were issued using the Artex SAC Limited vehicle and its ILS Note Program II, on behalf of a segregated account series named Silver Crane.
The notes have been placed with qualified investors and listed on the Bermuda Stock Exchange (BSX) as insurance related securities.
Private cat bonds tend to either be a bilateral arrangement, where a cedent and investor opt to use a private ILS structure to securitise the risks involved in a reinsurance transaction into an investable form. Or sometimes they can be syndicated, where a cedent wants to trade with multiple investors or ILS funds in a fully securitized format.
Private cat bond deals can also involve ILS fund to ILS fund transactions, which typically take the form of an industry loss warranty (ILW), where one party wants the output securitized.
Structures such as the Artex SAC vehicle provide an efficient platform for cedants and investors to achieve risk transfer and full securitization of the resulting investment, into a form that suits a more liquid or catastrophe bond focused ILS fund mandate.