Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

First Eclipse Re private cat bond of 2020 comes to market, a $10m issue


The Horseshoe managed private catastrophe bond and insurance-linked securities (ILS) issuance vehicle Eclipse Re Ltd. has completed its first issuance of 2020, a $10 million Eclipse Re Ltd. (Series 2020-01A) transaction.

EclipseAfter a busy 2019, when this transformer and private ILS platform was the issuer of at least around $300 million of private cat bonds (around double the prior year), it’s expected that 2020 will also prove buoyant for the vehicle, as securitisation of insurance and reinsurance risk remains in demand.

The Eclipse Re private cat bond transformer and issuance vehicle saw significantly more use in 2019 than in previous years, helped by the fact specialist cat bond and ILS fund manager Fermat Capital Management has been using the platform for some of its deal flow.

Details on every Eclipse Re private cat bond can be found in our catastrophe bond Deal Directory.

For its first transaction of 2020, a $10 million private catastrophe bond has been issued, with the notes placed with qualified institutional investors or a group of investors, which can be a single ILS fund manager such as Fermat given these private deals are often bilaterally arranged.

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

For the first deal of 2020, Eclipse Re Ltd. has issued a single $10 million tranche of private catastrophe bond notes which have been sold to investors or ILS funds. The proceeds from the sale of these notes will have been used as collateral to underpin related reinsurance or retrocession contracts.

This $10 million Eclipse Re Ltd. (Series 2020-01A) transaction saw special purpose Bermudian insurer Eclipse Re Ltd. issuing one tranche of Series 2020-01A notes from its segregated account SAC EC0026, with the notes having a due date of January 1st 2021.

As a result, it’s assumed the issued private cat bond notes represent a one-year reinsurance or retrocession arrangement, likely entered into at the recent renewal season.

The single $10 million tranche of notes issued by Eclipse Re has been admitted for listing on the Bermuda Stock Exchange (BSX) as insurance related securities.

ILS and reinsurance market facilitator and service provider Horseshoe Group is the lead facilitator for these Eclipse Re transactions, given it manages the vehicle and offers it to its clients.

Platforms like Eclipse Re benefit ILS fund managers and investors, providing a way to source an investable asset for their cat bond fund strategies, rather than a pure collateralised reinsurance arrangement.

By channelling a reinsurance or retro arrangement through a transformer and securitisation platform like Eclipse Re, investable notes suited to a more liquid ILS fund strategy can be secured.

We’ve added this $10 million Eclipse Re Ltd. (Series 2020-01A) private catastrophe bond to the Artemis Deal Directory.

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