AXIS Capital came to market to sponsor another collateralized reinsurance sidecar issuance through its Alturas Re Ltd. vehicle for 2022, with the sidecar issuing a Series 2022-2 (R) tranche of shares.
Specialist global re/insurer AXIS Capital continues to leverage its core Alturas Re Ltd. special purpose insurer in Bermuda to provide options for third-party investors to participate in its underwriting returns through quota shares.
The Alturas Re reinsurance sidecar structure allows AXIS to syndicate some of its risk to third-party investors in a securitized form, using underlying quota shares and the issuance of preference shares or principal-at-risk notes.
Alturas Re has, in the past, been used to cede both insurance and reinsurance risks to third-party investors by AXIS, but this year we’ve only learned of a single reinsurance issuance from the sidecar structure.
Back in December, the Alturas Re sidecar issued a Series 2022-2 (R) tranche of shares to investors, which we understand have been used to source collateralized quota share capacity to support the firms book of global property catastrophe reinsurance.
Details in terms of size of the transaction are unknown, but we understand it was a similar sized arrangement to the prior year and that this R tranche, of reinsurance exposed shares, is seen as a core arrangement for AXIS.
The R in the series name denotes these as reinsurance-linked notes, while in some of the previous Alturas Re issues an I in the series name has denoted insurance-linked issuances.
We expect the Series 2022-2 (R) shares will support an end of year renewal timed cession of reinsurance risk to a third-party investor, that was seeking an equity like way to access the returns of the sidecar, rather than a principle at-risk notes investment.
AXIS’ use of direct and private collateralized quota share arrangements with ILS investors has been an important part of its capital arrangements and catastrophe reinsurance for a number of years, but the Alturas Re sidecar enables the firm to syndicate its risks more broadly should it choose.
The Alturas Re sidecar helps AXIS Capital to take greater ownership of these quota share style cessions to investors and has enhanced options for delivery of risk and its syndication more widely, or in different forms to suit investor-needs.
While AXIS earns a share of fee income as well, by managing the risks within its own Alturas Re structure, rather than ceding them to an investor-owned protected cell structure.
Learn more about AXIS Capital’s plans in insurance-linked securities and with third-party capital in our recent video interview with some of its executives.
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.