Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Dodeka VII, $18.9m private cat bond launched by Twelve Capital


Another private catastrophe bond, or cat bond lite, transaction has been launched by Swiss headquartered ILS and reinsurance investment manager Twelve Capital, with the completion of Dodeka VII, an $18.899m deal.

The Dodeka series of private cat bonds is becoming a staple feature of the market, with regular issues around reinsurance renewals helping Twelve Capital to acquire risk in securitised, transferable form for its insurance-linked securities (ILS) fund strategies.

Dodeka VII, which saw its $18.899m of notes listed on the Bermuda Stock Exchange (BSX) yesterday, comes hot on the heels of two other recent private cat bonds from Twelve Capital, Dodeka VI and Dodeka V.

As you’d expect details on the transaction are limited, given its privately transacted nature.

Dodeka VII has, like the rest of the series, been issued using the Kane SAC Limited segregated accounts company vehicle. Dodeka VII represents a single segregated account of vehicle, which has been securitised into private cat bond form. The $18.899m of notes have a due date of the 20th July 2016, so represent an annual reinsurance contract.

Again, we’re assuming that this is a transformed industry-loss warranty (ILW) contract, using a PCS industry loss trigger and so covering U.S. natural catastrophe perils. It’s impossible to 100% confirm this, but all the prior Dodeka’s have followed this model.

ILW’s offer a simpler transaction, in terms of features, making them ripe for transformation and perhaps the most cost-effective way to acquire risk in a liquid securitised form for ILS fund managers like Twelve Capital.

By listing the $18.899 of Dodeka VII notes on the Bermuda Stock Exchange, the  liquidity of the notes can be enhanced. This provides Twelve Capital with improved options and additional transparency to trade the notes on the secondary cat bond market should it choose.

Previous Dodeka private cat bond transactions include Dodeka I in January 2014, Dodeka II in February 2014, Dodeka IV in June 2014, Dodeka III in August 2014, Dodeka I – 2015 in February 2015, Dodeka V in May 2015 and Dodeka VI in June 2015.

Dodeka VII has been added to the Artemis Catastrophe Bond Deal Directory and we will update the listing should additional details on the underlying structure emerge.

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