AXIS Capital, the global specialist re/insurer headquartered in Bermuda, has issued a first tranche of notes from its collateralised reinsurance sidecar vehicle Alturas Re Ltd. for 2020, sponsoring a $64.14 million issuance to expand on the collateralised quota share arrangement.
AXIS Capital’s Alturas Re reinsurance sidecar issued $169 million of notes for 2019, as the company continued to bring third-party capital within its business using the Bermuda domiciled special purpose insurer.
Alturas Re is relatively unique in the sidecar world, as it is dual use in that it features tranches of property catastrophe reinsurance related risk, as well as tranches that provide investors with access to the returns of some of AXIS’ property insurance risks.
Most collateralised sidecar investment vehicles either merge the two within a single tranche, or offer one or the other to investors.
For 2020 the first tranche to come to light from the Alturas Re sidecar is a $64.141 million Series 2020-2 (R) tranche of Class A notes.
We presume that the ‘R’ denotes that this is a property catastrophe reinsurance layer of the sidecar, but we cannot confirm that at this time. A year ago AXIS’ reinsurance tranche from Alturas Re was $75 million in size, for comparison.
The $64.141 million of Alturas Re Ltd. Series 2020-2 (R) Class A Participating Notes have a due date of March 10th 2023 and have been placed with qualified institutional investors.
The Alturas Re sidecar provides re/insurer AXIS Capital with fully collateralised reinsurance and retrocessional protection, given the two types of risk ceded through the vehicle, funded by capital market and insurance-linked securities (ILS) investors.
Alturas Re sits alongside AXIS’ other third-party capital arrangements, which include a range of private collateralised reinsurance and insurance-linked securities (ILS) deals, as well as a catastrophe bond.
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.
We expect that there will be more tranches issued from AXIS Capital’s Alturas Re sidecar vehicle around this January 2020 renewal season and we’ll update you as any information becomes available.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.