Eclipse Re in largest private cat bond, a new $100m ILS transaction

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The Eclipse Re Ltd. vehicle, a special purpose insurance and segregated accounts company that was originally launched by Horseshoe Group and Rewire Securities LLC, has completed its largest private catastrophe bond to-date, a $100 million Eclipse Re Ltd. (Series 2019-05A) ILS transaction.

EclipseIt’s the second transaction of the month issued by Eclipse Re, after a $30 million Eclipse Re Ltd. (Series 2019-03A) insurance-linked securities (ILS) deal issued earlier in July and the third of the year so far.

But more importantly, the Eclipse Re private ILS deals continue to gain scale, with this $100 million Series 2019-05A its largest single issuance to-date.

Eclipse Re provides a plaform for insurance-linked securities (ILS) funds or investors to engage in reinsurance and retrocession contracts more directly with ceding companies, with the result being a risk transfer arrangement transformed and securitized into private cat bond form.

ILS and reinsurance market facilitator Horseshoe Group is assumed as the lead facilitator on these Eclipse Re transactions, since Rewire Securities no longer operates as a broker-dealer, after its team launched insurance-linked securities (ILS) fund manager Merion Square Capital LLC.

In this latest and its largest transaction, Eclipse Re Ltd. has issued a single $100 million tranche of private catastrophe bond notes, which have been sold to investors or ILS funds and the proceeds used as the collateral to underpin linked reinsurance or retrocession contracts.

The $100 million Eclipse Re Ltd. (Series 2019-05A) transaction saw special purpose Bermudian insurer Eclipse Re Ltd. issuing one tranche of Series 2019-05A notes from its segregated account SAC EC0023, with the notes having a due date of June 1st 2020.

We assume these notes represent a one-year reinsurance or retrocession contract underwritten at the mid-year renewals, possibly featuring Florida wind risk given the contracts were likely in-force as of the June renewal.

The tranche of notes have been admitted for listing on the Bermuda Stock Exchange (BSX) as insurance related securities.

Horseshoe Group acted as the listing sponsor for the notes, through its Horseshoe Corporate Services Limited entity.

Further details are not available on the underlying risks and reinsurance contract behind this latest private cat bond deal, however we assume that the transaction underlying it features property catastrophe risks of some description, likely U.S. given the timing.

This third listed issuance from Eclipse Re takes those we’ve tracked in 2019 from the vehicle to $150 million of principal so far. We suspect there will be more to come, as there is at least one more deal where the Eclipse Re vehicle was used by ILS fund manager Fermat Capital Management to participate in Florida Citizens reinsurance renewal this year.

The Eclipse Re Ltd. platform was launched in 2017 to offer collateralized reinsurance providers a way to transform, securitize, market and place transactions with investors as private ILS or cat bond notes with secondary liquidity features.

We’ve added this $100 million Eclipse Re Ltd. (Series 2019-05A) private catastrophe bond to the Artemis Deal Directory.

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