Isosceles Insurance ILS platform in $25m private cat bond issuance

Isosceles Insurance Ltd., the private insurance-linked securities (ILS) and catastrophe bond platform operated by Marsh McLennan and reinsurance broker Guy Carpenter, has issued a new $25 million Isosceles Insurance Ltd. (Series 2021-B1) transaction, the third we’ve listed from the vehicle so far.

The Isosceles Insurance Ltd. (or Isosceles Re) platform was established in early 2020 as a private ILS and private cat bond (or cat bond lite) issuance platform, as the broking group looked to put to use a rent-a-captive vehicle it had inherited when MMC acquired JLT.

The Isosceles Re vehicle issues 4(2) or 4(a)(2) securities, so private placements including privately placed catastrophe bonds, insurance-linked securities (ILS) and also the securitisation of other transformed collateralised reinsurance arrangements.

In June 2020 the first private cat bond deal from the platform came to light, a $16.5 million Isosceles Insurance Ltd. (Series 2020-A1) arrangement.

That transaction was followed by a $25 million Isosceles Insurance Ltd. (Series 2020-C1) as the second private ILS deal to come to light from the issuance platform in September 2020.

Now, Isosceles Insurance Ltd. has issued a single $25 million tranche of Series 2021-B1 insurance-linked notes, which have been privately placed with qualified investors.

As with all private ILS deals, the details are scarce so we’ve had to make some assumptions in order to include this Isosceles private ILS transaction it in our catastrophe bond Deal Directory.

The $25 million of Series 2021-B1 notes issued by Isosceles Insurance Ltd. are structured as discounted zero coupon participating notes, typical of a private ILS transformation of a collateralised reinsurance or retrocession contract, converting it into something more liquid and investable as a security, usually for a cat bond specific fund or strategy.

The notes have a maturity date of March 30th 2022, which could suggest the underlying contract runs for about a year and that it might have been issued as part of an April renewal program placement.

As with all private ILS or cat bonds, we assume this issuance features property catastrophe reinsurance or retrocession risks, which have been transformed so as to provide an ILS fund or ILS investor with an asset that meets a catastrophe bond mandate, offering greater options in terms of secondary liquidity.

Typically, these private ILS or cat bond lite arrangements fit into one of a number of use-cases.

Either collateralised reinsurance for a primary insurance carrier that is transformed and securitised, to either be assumed by a single ILS fund or investor, or a small group of funds/investors.

Or as an ILS fund-to-fund transaction (hedging), or a retrocessional reinsurance placement transformation, or the transformation of a specific arrangement, such as an industry-loss warranty (ILW).

We expect that reinsurance broker Guy Carpenter’s dedicated capital markets unit GC Securities will have assisted this issuance by structuring the transaction and acting as a bookrunner, for this Isosceles Insurance Ltd. private ILS transaction. While Marsh Management Services will likely have acted as the insurance manager.

While this is the third transaction from the Isosceles Re platform that we’ve seen and listed, there are likely to be others more privately placed that we don’t get to hear of.

We’ve added this Isosceles Insurance Ltd. (Series 2021-B1) private ILS or private catastrophe bond transaction in our extensive cat bond Deal Directory.