Insurance-linked securities (ILS) and catastrophe bond investors were supportive of the first mortality bond to feature an indemnity trigger, according to Willis Re Securities who structured and placed the deal.
The $100 million La Vie Re Limited (Series 2020-1) catastrophe bond was completed recently, becoming the first extreme mortality bond for a U.S. direct underwriter of life insurance, in Securian Financial affiliate the Minnesota Life Insurance Company.
The insurance-linked securities (ILS) issuance not only secured extreme mortality reinsurance protection for life insurer sponsoring it, but also achieved another first as the first 144A extreme mortality cat bond to feature an indemnity trigger.
Willis Re Securities, the capital markets unit of the reinsurance broker, structured and placed the $100 million La Vie Re mortality bond issuance.
The broker unit hailed the transaction as “the first underwritten Rule 144A cat bond exposed to extreme mortality risk on an indemnity basis.”
The cat bond will provide Minnesota Life and Securian Financial Group with a $100 million source of fully collateralized mortality reinsurance protection against a deterioration of the performance of its group life business over a three-year period, the company explained.
The indemnity trigger has been structured on an annual loss ratio basis, an effective way to match the capital market backed reinsurance protection with the ceding companies own loss experience.
Willis Re Securities noted that, despite the uncertain environment created by the COVID-19 pandemic ILS investors “recognised the high quality cedant, its marginal risk and robust structure.”
“We are proud to have supported Securian in its inaugural catastrophe bond transaction,” explained Quentin Perrot, senior vice president, Willis Re Securities. “Thanks to the robust structure that an underwritten Rule 144A cat bond offers, investors have supported this first indemnity extreme mortality bond. This speaks to the increased openness of the ILS market to not only broaden the scope of assumed risks, but also recognises the strength of the Minnesota Life portfolio.”
“The La Vie Re cat bond will allow Securian Financial a long term and more sustainable access to the broader capital market investors. It demonstrates Securian Financial’s strategic utilisation of all the available sources of reinsurance capital,” added Jim Fallon, executive vice president, Willis Re. “Our team’s deep technical knowledge of Life, Accident and Health risk, ability to collaborate with our client and determination to find optimal solutions, were instrumental in successfully navigating the challenges of the present market environment. We are delighted to strengthen our relationship with Securian Financial through the issuance of this catastrophe bond.”