Guy Carpenter’s Cerulean Re ILS platform issues $12.6m of private cat bonds

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 issuance and listed three tranches of Cerulean Re SAC Ltd. (Series 2020-B) notes.

The Cerulean Re vehicle was launched in 2017 by Guy Carpenter’s capital markets and ILS focused unit GC Securities and parent MMC’s Marsh Captive Solutions unit, to provide an efficient vehicle for issuing privately placed or syndicated catastrophe bonds on client sponsors behalf’s.

The platform began to get traction in 2019, completing a first deal with 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.

A third private catastrophe bond transaction was completed by Cerulean Re SAC Ltd. in Q3 of 2019, when the vehicle issued $25 million of Series 2019-E1 principal at risk variable rate notes under its ILS Note Program.

Now, a fourth Cerulean Re private ILS transaction has come to light, with just over $12.6 million of Series 2020-B notes issued across three numbered tranches and listed on the Bermuda Stock Exchange (BSX).

The notes will have been sold to ILS investors or dedicated ILS funds, while the proceeds from their sale will have been used as collateral to underpin linked reinsurance or retrocession contracts, to the benefit of a ceding company.

Cerulean Re SAC Ltd., acting on behalf of three segregated accounts, has issued almost $3.27 million of Series 2020-B1 principal at risk variable rate notes, just over $6.8 million of Series 2020-B2 notes and $2.55 million of Series 2020-B3 notes, all under its ILS Note Program.

All three tranches of this private cat bond issuance have been structured as discounted, zero-coupon participating notes and all are due June 1st 2021.

Details are scarce, as is typical with most private ILS, cat bond lite type deals such as this.

We assume the three tranches of notes issued will represent securitisations of property catastrophe reinsurance or retrocession contracts, likely featuring U.S. perils given the June 1 due date.

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

Utilising a private cat bond platform such as Cerulean Re to securitise reinsurance or retrocession arrangements, means that investable notes suited to more liquid ILS fund strategies (like cat bonds) can be produced for investors or fund managers.

We’ve added these $12.6 million of  Cerulean Re SAC Ltd. (Series 2020-B)  private catastrophe bond notes to our Deal Directory, where you can read about every cat bond transaction since the market began.

This issuance takes private cat bond issuance for 2020 so far to almost $351 million. Details on all these transactions and many historical cat bond lites can be seen if you filter our Deal Directory to only display private deals.