Eclipse Re in $45.2m issuance, takes private cat bonds to $740m in 2021

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Eclipse Re Ltd., the Horseshoe managed private syndicated collateralised reinsurance note, private catastrophe bond issuance and reinsurance transformer platform, has issued four new tranches of cat bond notes, totalling roughly $45.2 million, with the four tranches potentially part of the same reinsurance or retrocession program arrangements.

Including these latest issues, from the Eclipse Re transformer platform, private catastrophe bond, or cat bond lite, issuance tracked by Artemis has now reached $740 million for the year in 2021.

The four Eclipse Re cat bond issuances only came to light yesterday, although could have been issued earlier this year and only now been submitted for a listing on the Bermuda Stock Exchange (BSX), as ever it’s challenging to tell with these more private ILS deals.

The Eclipse Re platform had issued almost $107 million of listed private cat bonds, or cat bond lites, in full-year 2020, which was down significantly on 2019’s almost $300 million of ILS deals issued through the structure.

2021 began on a strong footing for Eclipse Re, with the first private cat bond it issued back in January being an impressive $80 million in size.

The structure then completed a second issuance in April 2021, although at a much smaller size of just $8.7 million.

Now, with the addition of four new tranches of notes, totalling $45.2 million, issuance from the Eclipse Re vehicle in 2021 has reached almost $134 million, so now surpassing the full-year 2020 total.

Eclipse Re Ltd. is a Bermuda domiciled special purpose insurer (SPI) and segregated account company that is managed by insurance-linked securities (ILS) market facilitator and service provider Horseshoe, part of Artex.

Eclipse Re is typically used to enable issuance of insurance-linked securities (ILS) notes, via the transformation, securitisation and ultimately transfer to one, or syndication to a group of investors, of reinsurance or retrocession arrangements.

So its main use-cases are the issuance of privately syndicated collateralised reinsurance notes, or private catastrophe bond notes, with an ability to cover a range of underlying structures and perils, or lines of business.

Not every Eclipse Re private cat bond is broadly syndicated though, with the structure often used as a transformer for an ILS fund manager, to help them securitize a risk and make it investable for a catastrophe bond strategy.

Some of the Eclipse Re issuances over the last few years have been for the sole benefit of specialist, cat bond focused ILS fund manager Fermat Capital Management, acting as the investor behind a number of issuances from the platform.

The four issuances that have come to light this week all have the same maturity date, of May 31st 2022, which suggests the four could be slices of different layers of the same reinsurance or retrocession program.

It’s impossible to be sure though, so as with other Eclipse Re private cat bond issues, we’ve listed the four tranches as separate entries in our Deal Directory.

The $45.2 million of private cat bond notes issued breaks down as follows across the four series of notes.

As ever, we assume they all represent property catastrophe risk-linked notes, providing an unnamed protection buyer, or fund, with reinsurance or retrocession protection to the end of May 2022.

The notes have all been placed with qualified institutional investors and have been admitted to the Bermuda Stock Exchange (BSX) as insurance-related securities for their listing, with Horseshoe also acting as listing sponsor through its Horseshoe Corporate Services Limited unit.

The proceeds from the sale of the $45.2 million of private catastrophe bond notes across each series will have been used as collateral to underpin a linked reinsurance or retrocession contract, and the cash will be held in a trust.

ILS and reinsurance market service provider and facilitator Horseshoe will have taken a lead role as manager for these Eclipse Re Ltd. transactions, with this special purpose vehicle an important part of its offering to clients.

So the Eclipse Re vehicle has now surpassed its issuance of the prior year and this has also helped overall private cat bond and ILS issuance to extend its lead as well.

Including these new issues, 26 privately placed catastrophe bond transactions (series of notes) have now been issued and tracked by us here at Artemis.

These have a combined value of roughly $74o million for 2021 to-date, which is now more than double 2020’s just over $350 million.

private-catastrophe-bond-issuance-2021

Private catastrophe bonds (cat bond lites) and similarly privately placed insurance-linked securities (ILS) remain an effective way for ILS fund managers to transform risk into a securitized note format, or for cedants to access the capital markets in a more efficient manner than in a full-blown 144a catastrophe bond issue.

Issuance of private cat bonds in 2021 continues apace and is now getting towards the higher levels seen in prior years. The previous record was almost $1 billion of private cat bond issuance in 2017, so there is still a way to go to see a new record set in 2021.

You can read about every private catastrophe bond issued in our extensive Artemis catastrophe bond Deal Directory.

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