Eclipse Re Ltd., the Horseshoe managed private syndicated collateralised reinsurance note, private catastrophe bond issuance and transformer platform, has brought its first deal to market of 2021, an $80 million Eclipse Re Ltd. (Series 2021-01A) issuance.
Last year, the Eclipse Re platform was responsible for almost $107 million of listed private cat bonds, or cat bond lites, during the year, which was down on 2019’s roughly $300 million of deals.
2021 looks set to start off on a strong footing for the Eclipse Re vehicle though, as the first private cat bond it has issued is larger than any from last year and one of its largest ever, at $80 million in size.
Eclipse Re Ltd. is a Bermuda domiciled special purpose insurer (SPI) and segregated account company, managed by ILS market facilitator Horseshoe.
The structure is used to facilitate the issuance of insurance-linked securities (ILS) notes, through the transformation, securitisation and ultimately syndication to investors of reinsurance or retrocession arrangements.
So the main use-cases are the issuance of privately syndicated collateralised reinsurance notes, or private catastrophe bond notes.
Although, not every Eclipse Re private cat bond is broadly syndicated, as the structure is also used as a transformer for ILS fund managers. A number of issuances from the vehicle have been for the benefit of specialist, cat bond focused ILS fund manager Fermat Capital Management in recent years, acting as the sole investor behind certain issuances from the platform.
For the first Eclipse Re transaction of 2021, $80 million of Series 2021-01A notes have been issued by the vehicle, with the notes having a final maturity date of December 31st 2022, suggesting they could represent a two-year reinsurance agreement.
As with every Eclipse Re private ILS deal, we cannot be sure of the underlying risk though, so we make the assumption these are property catastrophe risk-linked notes, providing an unnamed protection buyer with up to two year’s of reinsurance or retrocession protection.
The $80 million Series 2021-01A issuance from Eclipse Re, which appears to be a private cat bond or securitisation of a collateralised reinsurance arrangement, represents the vehicles segregated account EC0033.
The notes have been placed with qualified institutional investors and have been admitted to the Bermuda Stock Exchange (BSX) as insurance-related securities for listing, with Horseshoe also acting as listing sponsor through its Horseshoe Corporate Services Limited unit.
The proceeds from the sale of the $80 million of private cat bond notes will have been put to work as collateral to underpin the related reinsurance or retrocession contract.
ILS and reinsurance market service provider and facilitator Horseshoe takes a lead role as the manager for these Eclipse Re Ltd. transactions, with this special purpose vehicle an important part of its offering to clients.
Platforms such as Eclipse Re benefit ILS fund managers and investors by enabling reinsurance or retrocession arrangements to be channelled to them through a efficient risk transformation and securitisation platform, with investable notes suited to a more liquid ILS fund strategy the resulting asset.