Isosceles Insurance Ltd., the private insurance-linked securities (ILS) and catastrophe bond issuance platform operated by Marsh McLennan and reinsurance broker Guy Carpenter, has completed another transaction, with a $21.5 million Isosceles Insurance Ltd. (Series 2021-H) issued.
The Isosceles Insurance Ltd. (or Isosceles Re as it’s known) ILS issurance platform was established in early 2020 as a private ILS and private cat bond (or cat bond lite) issuance platform, as the broking group sought 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.
Since its launch, we’ve listed a number of Isosceles Re private cat bond transactions in our extensive catastrophe bond and related insurance-linked securities (ILS) Deal Directory.
This latest issuance from the Isosceles Re structure takes the number of deals we’ve listed from the vehicle to seven.
In this latest issuance to come to light, Isosceles Insurance Ltd. has issued one new tranche of privately placed insurance-linked notes, or private cat bonds, totalling $21.5 million of risk capital issued.
As with every private ILS or cat bond deal we encounter, details are limited, so we’ve had to make some assumptions in order to include these Isosceles Re private ILS transactions in our catastrophe bond Deal Directory.
The $21.5 million of Series 2021-H notes issued by Isosceles Insurance Ltd. have been 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 ILS strategy.
The $21.5 million of Series 2021-H notes have a maturity date of August 5th 2022, suggesting they may be a reinsurance or retrocession transaction entered into earlier this summer and that has taken longer to come to light, or that they could represent a cedant buying back-up cover after some of the recent catastrophe loss events around the world.
As with every private ILS or cat bond deal, we assume this covers property catastrophe reinsurance or retrocession risks, which will have been transformed to enable an ILS fund or ILS investor to source an asset that meets a catastrophe bond mandate, offering greater options in terms of secondary liquidity, or simply so a cedant can access the capital market for protection.
In the main, private ILS or cat bond lite arrangements fit into one of a number of use-cases.
Either as a straight collateralised reinsurance cover for a primary insurance carrier, that has been 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 risk transfer arrangement, such as an industry-loss warranty (ILW).
Normally, reinsurance broker Guy Carpenter’s dedicated capital markets unit GC Securities will have structured the transaction and acted as a bookrunner, for this Isosceles Insurance Ltd. private ILS transaction. While Marsh Management Services will likely have acted as the insurance manager for the vehicle itself.