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Xactanalysis Insights and PCS

Four SPI registrations in Bermuda takes 2015 total to 20


In December 2015, registrations of new insurance and reinsurance vehicles in Bermuda featured a number of ILS and collateralized reinsurance focused vehicles, with four new special purpose insurers (SPI’s) taking the total for the year to twenty.

According to the Bermuda Monetary Authority (BMA) 11 new insurance and reinsurance registrations were confirmed in December, with 4 of these being newly registered special purpose insurers (SPI’s).

In total there were 64 new re/insurers registered in Bermuda in 2015, compared with 65 registrations in 2014. For SPI’s the number registered was down, at 20 for the year in 2015 compared to 28 the year before, but this is not all that surprising considering SPI’s are available for the sponsor to use over multiple underwriting years, or to facilitate multi-year catastrophe bonds or ILS deals.

SPI’s registered in December 2015 did not appear to be catastrophe bond issuance vehicles, with three being easily identifiable and the third potentially a new sidecar SPI for a major insurer (difficult to confirm).

Norwood Re Ltd. is an SPI set up by Tokio Millennium Re, the global reinsurance operations of Tokio Marine & Nichido Fire Insurance Co., Ltd. The formation of Norwood Re provides TMR’s Capital Solutions unit with a Bermuda-domiciled special purpose insurance vehicle through which to facilitate collateralized reinsurance transactions or private catastrophes bonds and ILS deals. The December registration looks like the formal ok for this vehicle to begin facilitating business.

The second SPI registered in December is named Scimitar CAT Re, Ltd. This one is unknown to us and hard to identify currently. However the registration information for Scimitar CAT Re shows that the SPI is registered at the ACE Bermuda (now Chubb of course) offices, where only subsidiaries of ACE or vehicles used by its captive management and facilitation team are registered.

Given the name, it looks like this SPI is certainly going to have a catastrophe reinsurance focus. However at this time it’s not possible to identify whether the Scimitar CAT Re Ltd. vehicle is for ACE/Chubb to use as a sidecar, or perhaps for its insurance management team to facilitate transactions, or perhaps ACE/Chubb is looking for capital markets support in some other way.

The other two SPI’s registered in Bermuda during December are clearly both reinsurance vehicles to facilitate collateralized transactions for London headquartered specialist insurance linked securities (ILS) and reinsurance investments manager Securis Investment Partners.

Securis Re VI Ltd. and Securis Re VII Ltd. are the latest vehicles to be registered by the ILS asset manager in Bermuda, as the firm continues to expand its platform for underwriting on the island.

Across the whole of 2015 the 20 SPI registrations reflect the continued growth and scale of the insurance-linked securities (ILS) and collateralized reinsurance market, with catastrophe bond vehicles, sidecars and collateralized SPI’s all launching during the year.

The rate of SPI registrations has slowed somewhat on recent years, but that is no surprise given the multi-year and reusable nature of SPI’s, meaning sponsors do not have to return to the registration process every year.

Bermuda remains the leading domicile for capital markets re/insurance transactions and for investing in insurance or reinsurance risk.

Also read:

Cat bond & ILS listings on Bermuda BSX pass $19.2bn at end of 2015.

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