Hamilton, the Bermuda based insurance and reinsurance holding company, is entering the catastrophe bond market for its first full, syndicated Rule 144a transaction and Singapore is to be the domicile of choice, after the company registered Easton Re Pte. Ltd. as an issuer.
Our sources told us that Hamilton would likely return to the catastrophe bond market towards the end of this year, as it seeks out third-party capitalised retrocessional reinsurance protection for the book underwritten by its reinsurer Hamilton Re.
Hamilton Re has sponsored a private catastrophe bond issuance before, using reinsurance broker Guy Carpenter’s cat bond issuance vehicle Cerulean Re SAC Ltd.
That $60 million Cerulean Re SAC Ltd. (Easton 2019-1) transaction provided Hamilton Re with retrocessional reinsurance protection against losses from U.S named storms and US earthquakes, across two tranches of notes, on an industry loss trigger and per-occurrence basis.
The U.S. named storm coverage from that cat bond only lasted for a single wind season, expiring at the end of 2019, while the earthquake protection ran until May 31st 2020.
But now, we’re told Hamilton has the appetite to lock-in retro reinsurance protection from the capital markets through a full catastrophe bond issuance, favouring a broader offering and to establish and register its own special purpose reinsurance vehicle, with Singapore chosen as the domicile of issuance.
Enter Easton Re Pte. Ltd., which was incorporated as a special purpose reinsurance vehicle in Singapore just this week on November 27th 2020, we can report.
Easton Re Pte. Ltd. will issue Series 2020-1 notes that will be offered for sale to investors and we believe they are likely to be exposed to both U.S. wind and earthquake risks, with the proceeds secured used to collateralize underlying retrocessional reinsurance agreements between Easton Re Pte. Ltd. and Hamilton Re.
We’re told to expect a multi-year deal, likely with a three year term and believe that the Easton Re Pte. catastrophe bond is likely to feature an industry loss index, given the retrocessional nature of the coverage.
We understand that this deal has not been officially offered to investors at this time, but its marketing is said to be imminent.
It’s interesting to see Hamilton, a Bermuda based company, looking to Singapore for its first full catastrophe bond issuance.
But with Singapore’s ILS grant program still in place and extended to the end of 2022, offering significant savings to cat bond sponsors, perhaps this shouldn’t be a surprise. As the added savings will make sponsoring a cat bond an even more efficient way to source risk transfer and reinsurance protection at this time.
Hamilton is increasing its activity in insurance-linked securities (ILS) and third-party reinsurance capital, with its first full cat bond issuance set to follow closely behind the launch of its collateralized retrocession investment manager, Ada Capital Management.
Alongside its Turing Re reinsurance sidecar and the other activities under the the Hamilton ILS platform, Ada and now this anticipated Easton Re Pte. catastrophe bond, all serve to underscore the companies appetite for bringing the capital markets more deeply into its underwriting business.