Global specialist re/insurer AXIS Capital has added another layer to its Alturas Re collateralised sidecar issuance for 2020, with $47.25 million of what look like property catastrophe insurance linked notes issued in two tranches.
At the end of 2019 we reported that AXIS Capital had issued $64.14 million of notes in its first Alturas Re sidecar issuance for 2020, in a deal that looks to have been a renewal of the property catastrophe reinsurance layer of the vehicle.
Now, it appears that the short-tail property catastrophe insurance linked layers have been issued and sold to investors, as AXIS Capital continues to leverage the Alturas Re sidecar to cede both insurance and reinsurance risks to capital market investors.
The company continues to expand on its insurance-linked securities (ILS) activities, particularly in private quota shares, while the Alturas Re sidecar allows it to also syndicate some of its risk to investors in securitised form.
The Alturas Re sidecar remains relatively unique, as it is dual use in featuring some tranches of property catastrophe reinsurance related risk, as well as tranches that provide investors with access to the returns of some of AXIS’ primary property insurance risks.
Most collateralised sidecar investment vehicles are focused on one or the other, or merge them within a single quota share arrangement across the sponsors portfolio.
For this latest issuance to come to light, Alturas Re Ltd. has issued $47.25 million of Series 2020-1 (I) notes.
The $64.14 million issuance at the end of 2019 was a Series 2020-2 (R) transaction. We’re assuming the R denotes reinsurance-linked notes, while the I denotes insurance-linked.
Alturas Re issued a $5.305 million tranche of Series 2020-1 (I) Class A notes and a $41.945 million tranche of Class B notes as well.
The notes are due March 10th 2023, which is the same maturity as the 2020-2 (R) reinsurance tranches of the vehicle.
The Alturas Re sidecar issues from AXIS Capital are both a little smaller than a year ago, when the reinsurance section of the sidecar was $75 million in size and the insurance section $55 million.
For 2020 the total size of the Alturas Re sidecar’s January issuances have reached almost $111.4 million so far.
While reinsurance sidecar activity has been buoyant in recent weeks, some issuances have again faced challenges in getting placed and investor appetite has not been seen to increase for many sidecar vehicles at this renewal.
So AXIS’ experience of its sidecar seemingly being slight down year-on-year, in terms of size, is not unusual.
AXIS’ use of direct quota share arrangements with ILS investors has been an important piece of its capital stack in recent years, while the Alturas Re sidecar enables the firm to syndicate its risks more broadly.
The Alturas Re sidecar allows AXIS Capital to take greater control of these quota share style cessions to investors and syndicate its risks more widely, while earning a share of fee income by managing them within its own vehicle rather than ceding them to an investor owned protected cell structure.
For details of many reinsurance sidecar investments and transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.