Eclipse Re Ltd. private cat bond platform in $8.7m issuance

Eclipse Re Ltd., the Horseshoe managed private syndicated collateralised reinsurance note, private catastrophe bond issuance and reinsurance transformer platform, has completed its second issuance of this year, with an $8.7 million Eclipse Re Ltd. (Series 2021-02A) deal coming to light.

The Eclipse Re platform issued almost $107 million of listed private cat bonds, or cat bond lites, during 2020, which was a decline on 2019’s nearly $300 million of ILS deals issued by 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.

Now the structure has completed its second issuance, at a much smaller size of just $8.7 million.

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

The Eclipse Re structure is 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.

As a result, the main use-cases for Eclipse Re 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 ILS fund managers.

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

For its second deal of 2021, Eclipse Re Ltd. has issued $8.7 million of Series 2021-02A notes, with the notes having a final maturity date of December 31st 2021, suggesting they could represent a transaction that runs from the April renewal through to year-end.

That might suggest the underlying is a property catastrophe exposed contract such as an industry-loss warranty (ILW), designed to cover the US hurricane season, however we cannot be sure. But we do assume they are property catastrophe risk-linked notes, providing an unnamed protection buyer, or fund, with reinsurance or retrocession protection to the end of 2021.

The $8.7 million issuance of Series 2021-02A notes from Eclipse Re represent the vehicles segregated account EC0034.

The notes have 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 $8.7 million of private catastrophe bond notes will be used as collateral to underpin the related reinsurance or retrocession contract, held in a trust.

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

Private ILS and cat bond issuance structures, such as Eclipse Re, can be of benefit to both ILS fund managers and investors by enabling reinsurance or retrocession arrangements to be channelled to and between them via an efficient risk transformation and securitisation platform, with the resulting asset being series of investable notes suited to more liquid ILS fund strategies, such as cat bond funds.

We’ve added this new $80 million Eclipse Re Ltd. (Series 2021-02A)  private catastrophe bonds to the Artemis Deal Directory.