Neuberger Berman in new NB Re share issuance, likely to support capital raise

The NB Reinsurance Ltd., the Class 3 reinsurer of global asset manager Neuberger Berman’s insurance-linked securities (ILS) operations, has completed a new issuance of shares which are likely to support new capital raising activities.

The Bermuda domiciled reinsurance vehicle NB Reinsurance Ltd. was first launched in 2009 as Iris Reinsurance Ltd., at the time operated by the Cartesian Capital Group insurance-linked investments unit Cartesian Re.

Neuberger Berman, a private investment manager with over $320 billion of assets under its management, acquired the insurance-linked securities (ILS) and collateralized reinsurance investment management entities of the Cartesian Capital Group last year.

The Class 3 reinsurer and segregated accounts company used by the Neuberger Berman Insurance-Linked Strategies team within its operations was then renamed to NB Reinsurance Ltd. (NB Re), bringing the branding into line with the new owner of the ILS investing operations.

As a fully regulated reinsurer, NB Re provides reinsurance backed by insurance-linked investment capital, with a particular focus on industry-loss warranties (ILW’s), other index related or parametric re/insurance coverage and underwrites a wide range of global catastrophic perils.

NB Re, acting on behalf of one of its segregated accounts called NB ILS BSX, has issued 100,000 insurance-linked redeemable preferred shares at a par value $1.00 each.

The 100,000 shares have been admitted for listing on the Bermuda Stock Exchange (BSX) as insurance related securities.

We assume that the share issuance has been completed to support the capital raising activities of the Neuberger Berman ILS team.

In the past, the same team when under the Cartesian brand, had issued shares through the reinsurer to support capital raising and as mechanism to enable new investors to participate in its returns.

By listing the issued shares on the BSX, they will benefit from an element of liquidity and transferability, in a similar manner to some of the collateralised reinsurance sidecar shares offered to ILS and insurance-linked investors.

Hence, the shares can be offered to investors as an entry point for new allocations of capital to support the underwriting of the NB Re vehicle, enabling investors to participate in its returns.

The team previously told us that by issuing and listing shares, qualified investors have another way to access the returns of its strategies and the shares can act as a complement to the fund strategies on offer.

It’s assumed that the same strategy persists today and this new NB Re share issuance will also enable qualified investors to access the reinsurance linked returns generated by the Neuberger Berman team, via an exchange listed share class.

In the past the team had also offered enhanced transparency, as well as liquidity, to holders of these shares, providing a publicly reported net asset value for its listed share class in what was at the time Iris Re.

Now, under the NB Re brand, this strategy of providing regular and relevant information to investors appears to be continuing with this latest share class listing from Neuberger Berman’s ILS team.

Update: This share issuance has raised an initial $19.231 million of capital for the NB ILS strategy.

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