Guy Carpenter’s Cerulean Re ILS platform completes $25m private deal

Cerulean Re SAC Ltd., the private catastrophe bond and insurance-linked securities (ILS) issuance vehicle operated by reinsurance broker Guy Carpenter and Marsh Captive Solutions, has completed another transaction, a $25 million Cerulean Re SAC Ltd. (Series 2019-E1) issuance.

The Cerulean Re vehicle was established in 2017 by Guy Carpenter’s capital markets and ILS specific unit GC Securities and parent MMC’s Marsh Captive Solutions unit as an efficient vehicle for issuing catastrophe bonds on client sponsors behalf’s.

The platform has started to get traction in 2019, having completed its first deal a $60 million private cat bond sponsored by Bermuda-based reinsurance firm Hamilton Re, which it followed up by listing some additional privately placed ILS tranches as well.

Now what looks to be a third private catastrophe bond transaction has been completed by Cerulean Re SAC Ltd., after the vehicle issued and listed a $25 million tranche of notes.

Cerulean Re SAC Ltd. has issued $25 million of Series 2019-E1 principal at risk variable rate notes under its ILS Note Program.

The notes will have been sold to investors or ILS funds and the proceeds from their sale will have been used as collateral to underpin linked reinsurance or retrocession contracts.

The $25 million of Series 2019-E1 notes are due May 31st 2020 and were admitted for listing yesterday on the Bermuda Stock Exchange (BSX) as insurance related securities.

As ever with these private cat bond or ILS deals details are scarce.

We assume the notes will represent a securitisation of a property catastrophe reinsurance or retrocession contract and likely feature U.S. perils given the end of May due date.

Given this is the Guy Carpenter operated issuance platform, it’s safe to assume that the reinsurance brokers capital markets unit GC Securities will have acted as sole arranger, structuring agent and placement agent or bookrunner for this issuance of private cat bond notes.

Private cat bond and ILS platforms like Cerulean Re are used by cedants that want to access the capital markets more efficiently and ILS fund managers that want an investable asset for their cat bond strategies, rather than a pure collateralised reinsurance arrangement.

By channelling a reinsurance or retrocession arrangement through a platform like Cerulean Re securitised, investable notes suited to more liquid ILS fund strategies (like cat bonds) can be secured.

We’ve added the $25 million Cerulean Re SAC Ltd. (Series 2019-E1) private catastrophe bond issuance to our Deal Directory, where you can read about every cat bond transaction since the market began.