Hamilton Insurance Group’s recent successful completion of its first full 144A catastrophe bond issue, the Easton Re Pte. Ltd. (Series 2020-1) transaction, shows that, alongside its Ada Capital Management launch, shows the company is gaining momentum in ILS and its ambition to grow its third-party capital under management, according to its executives.
As we had reported first on December 1st 2020, Hamilton was sponsoring its first full catastrophe bond issue and had turned to Singapore as a domicile to secure collateralized reinsurance from the cat bond market.
The issuance went well for Hamilton and secured the company $150 million of multi-year U.S. named storm and U.S. earthquake retrocessional reinsurance protection, on an industry loss trigger basis.
Perhaps most impressively though, as the reception from insurance-linked securities (ILS) funds and cat bond investors, who helped Hamilton to secure the cat bond at pricing well below the initial guidance, as we documented at the time in mid-December.
“We’re extremely pleased to announce the success of this new cat bond transaction, which is the first of its kind for Hamilton,” explained Tony Ursano, Group CFO at Hamilton.
“That we were able to attract significant investor interest and to execute the transaction at highly competitive pricing well below initial market guidance, underscores our position as a growing and respected global specialty insurance and reinsurance carrier, focused on becoming a best in class underwriter,” Ursano added.
The Easton Re cat bond notes eventually priced at roughly 16% below the initial mid-point of spread guidance, which is a trend that has continued into 2021 as every 144A cat bond has priced down significantly so far this year.
“This transaction, together with the recent launch of Ada Capital Management Limited, underwriting on behalf of Ada Re, Ltd., a Bermuda-registered special purpose insurer, illustrates how we are gaining momentum in our ILS strategy,” Hanni Ali, SVP, Strategic Partnerships commented.
“We aim to build a significant third-party capital management platform through the continued development of partnerships with institutional investors across the globe,” Ali said.
Hamilton as a group clearly recognises that by using third-party reinsurance capital the company can both expand its relevance for clients, build out its footprint in markets like retrocession where its own balance-sheet may not be as well-suited, secure hedging capacity to underpin the risks it underwrites and also earn meaningful fee income at the same time.
It’s no surprise the company wants to expand its activities in the third-party capital space and sponsoring catastrophe bonds as a way to augment its sources of retro reinsurance capacity is likely just another step on the group’s way to building out its ILS and third-party capital management.