GC Securities, the capital markets unit of reinsurance broker Guy Carpenter, and Marsh Captive Solutions have jointly launched Cerulean Re, a collateralized reinsurance platform designed to make it simpler and more efficient for cedents to access collaterlized capacity or issue private catastrophe bonds.
Cerulean Re SAC Ltd. is a Bermuda registered segregated account company (SAC) and licensed special purpose insurer designed by GC Securities to operate as a private syndicated collateralized reinsurance platform and private cat bond issuance vehicle.
GC Securities acts as arranger and Marsh Captive Solutions as insurance manager to Cerulean Re, to provide cost-efficient access to capital markets backed and fully-collateralized reinsurance solutions.
The Cerulean Re platform standardises many steps in the placement process and documentation required for transacting in fully-collateralized reinsurance, offering clients what the partners call “significant operational and expense efficiencies” in bespoke, fully-collateralized reinsurance solutions.
“Insurers, reinsurers, corporations and governments accessing long-term capital markets-based protection can now receive unparalleled support and expertise that brings the right capital to their risks,” commented Cory Anger, Global Head of ILS Origination and Structuring for GC Securities. “This collaboration offers an expansion of collateralized reinsurance opportunities, matching a more diverse range of capital sources seeking non-correlating investments to the unique risk profile of clients, thereby creating more efficient solutions.”
Cerulean Re can help cedents eliminate credit risk, through the fully-collateralized nature of the deals it supports, while offering them compliance with credit-for-reinsurance requirements as well.
It also features “A documented post-event collateral retention mechanism ensures a transparent and efficient claims development and collateral release process, while a single-firm execution process with the ability to bundle investor participation streamlines documentation.”
The vehicle is also hoped to be used to bring new risk to ILS investors and the capital markets, tapping the Marsh Captive Solutions clients base to bring elements of primary corporate risk into ILS transactions, the launch partners announced.
That could be a very attractive prospect for investors looking for new sources of risk from closer to the original source, while also enabling captive owners to back their risks with, or transfer them to, fully-collateralized capital solutions. The captive market is an enormous source of risk, some of the holders of which would benefit from risk transfer and capital backing.
Cerulean Re can also work with all types of triggers, including indemnity, industry loss index and parametric, so offering flexible solutions to provide bespoke and comprehensive coverage.
“ILS is an established part of the reinsurance and capital markets, and its participation is not wholly dependent on the (re)insurance cycle,” stated David Priebe, Vice Chairman, Guy Carpenter. “It is here to stay. Cerulean leverages this capacity to support uninsured and underinsured risks, including emerging risks such as cyber and the ‘Internet of Things’, and we are excited about its ability to help our clients bring opportunity to risk to grow profitably.”