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PCS - Emerging Risks, New Opportunities

Dunamis launches innovative, cost-effective catastrophe bond platform Kalista


Bermuda based holding company Dunamis Holdings Ltd. has just announced the launch of Kalista, a cost-effective platform for efficiently issuing catastrophe bond transactions. Kalista launches as a result of the combined efforts of Dunamis, Limestone Law, a Bermuda law firm, the Bermuda Stock Exchange (BSX) and a Bermuda reinsurer (presumably Dunamis Re, the soon to launch retro play from Dunamis Holdings).

Dunamis say that Kalista aims to be an innovative product which aims to lower the barriers to entry for sponsors in the insurance-linked securities and catastrophe bond space. Kalista will offer faster deployment times, meaning sponsors can get deals to market more quickly, and reduced issuance costs, by taking advantage of the partnership involved. Kalista also has a strategic partnership with modelling firm RMS to allow for the modelling of natural catastrophes.

This kind of low-friction, lower-cost approach to cat bond issuance is sure to be popular with potential sponsors who are often scared off the market due to the high-costs associated with issuing a cat bond or ILS. The onboard law firm, Limestone, means lower legal costs and in-house structuring abilities, the partnership with RMS means access to top modelling tools and the links with the BSX means listing of cat bonds and ILS could be simpler.

This is a pretty exciting development for the market if it gains traction. Giving sponsors the ability to bring risks to Kalista to be issued according to their needs as cat bonds or ILS with the benefits of getting listed on the BSX could attract new types of sponsors and new types of risk to the market. We assume deals can be rated if required or indeed privately issued if that is preferred. The group involved certainly seem keen to bring new risks to market and cite recent deals such as the MyLotto transaction or the Oak Leaf Re private cat bond as types of transactions they can service.

Spencer Conway, Executive VP of Dunamis commented “The introduction of this product is exciting for both Bermuda and the ILS market. With the demand for new and varied innovative catastrophe bond structures increasing (lottery, oil and gas etc.), Kalista meets participants head on by providing a stream-lined cat-bond issuance platform, simplifying both the setup and structuring of these deals.”

We spoke with Spencer Conway today, and he said he see’s Kalista as almost a ‘one-stop-shop’ platform for cat bond issuance. Kalista can help sponsors by getting the best services providers involved where required, especially on larger public cat bond or ILS deals, or by doing the majority of the issuance work in-house for smaller, private cat bond and ILS transactions. He wants Kalista to be seen as an opportunity for new sponsors to enter the cat bond and ILS market, for primary underwriters to bring their risks to Kalista and use them like a transformer reinsurance vehicle and for established ILS players to try out new and innovative types of risk in cat bond or ILS issuances more cheaply and quickly.

Simon J. Payne, a Managing Partner at Limestone Law commented; “Success or failure in business is determined by the quality of our business relationships and our ability to think outside of the box and Kalista is a great example of this thinking”

“New innovations like this further enhances Bermuda’s reputation as the cat bond destination of choice for the insurance world.” said Greg Wojciechowski, President and Chief Executive Officer of the Bermuda Stock Exchange. “Having the product listed also enhances its marketability and visibility.”

Kalista sounds like it has a lot of promise. We’ll be watching this new issuance platform closely to see how they progress and hope to see the first Kalista deals come to market very soon.

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