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Xactanalysis Insights and PCS

Fibonacci Reinsurance Ltd. $140m 2017 sidecar notes listed on BSX


Another collateralized reinsurance sidecar transaction has been completed for the January renewal, with a Fibonacci Reinsurance Ltd. participating notes program and $140 million of Series 2017-1 notes issued and having now been listed on the Bermuda Stock Exchange (BSX).

This is the fourth reinsurance sidecar transaction we’ve now seen completed in time for this January 2017 renewal, as the use of segregated account vehicles and special purpose insurers in order to cede insurance and reinsurance risks to third-party capital market investors continues to proliferate.

Information is once again limited on this Fibonacci Re reinsurance sidecar deal, but what we do know is that Fibonacci Reinsurance Ltd. is a Bermuda domiciled special purpose insurer (SPI), registered in November, which is being used as a reinsurance sidecar type vehicle in order to cede risks to capital market investors.

On December 30th 2016 a participating notes program under Fibonacci Reinsurance Ltd. has been admitted for listing on the BSX, along with a $140 million tranche of Series 2017-1 Class A participating notes, which are due January 10th 2018.

Participating notes typically represent a debt issuance to enable third-party investors to participate in a collateralised reinsurance portfolio, usually a quota share of a ceding companies property catastrophe and sometimes specialty risks.

The listed nature of the notes does enable them to be traded, but still transfer of reinsurance sidecar notes between investors tends to be limited as they are typically more attractive to hold to maturity.

The $140 million of notes issued by Fibonacci Re have been admitted for listing on the BSX under the Section V Insurance Related Securities classification and have been placed with qualified investors.

Once again this transaction under Fibonacci Reinsurance provides a ceding insurer or reinsurer with a way to efficiently cede risks to third-party investors, so benefiting from collateralised reinsurance and the efficiency of the capital markets.

The increasing importance and prevalence of the capital markets and ILS capital in insurance and reinsurance is evident in these new sidecar transactions for this renewal, Artemis believes. These vehicles, such as the Limestone Re Ltd. transaction from Liberty Mutual , last week’s Leo Re Ltd. transaction and now Fibonacci Re, often become permanent, reusable ways for cedents to access third-party capital, which will further help ILS and alternative capital grow in reinsurance.

If any further information comes to light on this Fibonacci Re sidecar transaction we will update you.

For more details on reinsurance sidecar transactions and investments view our list of collateralized reinsurance sidecars.

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