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Xactanalysis Insights and PCS

First PCS marine & energy ILW traded, Twelve Capital backs it


The first marine and energy industry loss warranty (ILW) transaction has been traded using the PCS Global Marine and Energy non-elemental industry loss index service, with insurance and reinsurance linked investment manager Twelve Capital providing the capacity to back the deal.

PCS launched the new service earlier this year, with the service becoming the firm’s first foray outside of property catastrophe risks, into specialty risks from the energy and marine insurance and reinsurance arena.

PCS data is widely used for trading industry loss trigger transactions, such as ILW’s and catastrophe bonds, but they have always been catastrophe risk exposed, so this first transaction using the marine and energy index as a trigger is the first in specialty risks for PCS.

Tom Johansmeyer, assistant vice president, PCS Strategy and Development, commented to Artemis; “We are thrilled with the vote of confidence in our first global specialty lines index. Having the support of a market like Twelve Capital is an honour and a clear statement as to the effectiveness of PCS Global Marine & Energy.”

According to our sources the broker on the marine and energy ILW transaction was Willis Re, the reinsurance arm of Willis Towers Watson.

It’s encouraging to see this first deal using the new marine and energy index from PCS as a trigger, as it proves the concept, demonstrates that there are protection buyers looking for this type of coverage and the fact an ILS market is backing it shows the appetite from certain ILS funds and investors for specialty classes of reinsurance risks.

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