Twelve Capital Management, the Zurich headquartered insurance and reinsurance linked investment fund manager has completed the issuance of its eighteenth private catastrophe bond transaction, with a $9.603 million Dodeka XVI deal.
The Dodeka series of private catastrophe bond or insurance-linked securities (ILS) arrangements have become an integral part of Twelve Capital’s strategy to source property catastrophe risks in securitised form for its ILS fund mandates and investors.
These privately securitized and placed cat bond arrangements enable Twelve Capital to transform property catastrophe reinsurance or retrocession risks into an investable form to suit a liquid cat bond strategy.
Including this new eighteenth Dodeka private ILS transaction, Twelve Capital has now securitized roughly $340 million of reinsurance risk through this series of private cat bonds, or cat bond lites.
This latest Dodeka XVI private cat bond transaction has been issued using Artex’s SAC Limited vehicle, managed by ILS facilitator Artex, with Dodeka XVI representing a single segregated account of the issuance vehicle.
The underlying peril exposure in the segregated account has been transformed into private ILS or cat bond form, resulting in the issuance of $9.603 million of tradable and listed principal-at-risk ILS notes.
These $9.603 million of Dodeka XVI insurance-linked notes have a due date of the 27th December 2018, so appear to represent a reinsurance or retrocession contract designed to provide coverage across the duration of the U.S. wind season, we assume.
The maturity date is the same as for the previous Dodeka XV arrangement as well, which suggests the two most recent Dodeka private cat bonds may be related, in terms of either being part of the same reinsurance layer or tower, or a similar structure.
Dodeka XVI’s $9.603 million of notes have been admitted to the Bermuda Stock Exchange (BSX) as Section V Insurance Related Securities and the notes have been sold to qualified ILS investors, which will be funds or managed accounts owned by Twelve Capital.
As with all of the Dodeka series of private ILS deals, we make the assumption that this Dodeka XVI cat bond lite features a transformed industry-loss warranty (ILW) contract, using a PCS industry loss trigger and covering U.S. natural catastrophe risks (likely U.S. wind because of the risk period).
The Dodeka series of private catastrophe bonds provides ILS manager Twelve Capital with an effective way to offer capital markets backed reinsurance coverage to reinsurance and retrocession counterparties, while sourcing catastrophe risk in securitised note form, as well as with potential liquidity for its ILS investment funds.