Another new private catastrophe bond, or cat bond lite, transaction has been completed, issued and listed in Bermuda using the Artex SAC Limited ILS Note Program II, in the form of $8.311 million of Artex SAC Limited – Series EX Notes.
It’s only the second of these transactions facilitated by Artex to come to market in 2017, following a $50.227 million Artex SAC Limited – Series DX Notes deal that completed in January.
As ever, details are limited on this latest private cat bond or ILS deal from the Artex Risk Solutions issuance platform, as it has been privately arranged and issued for an unknown sponsor.
Such transactions usually involve an established insurance-linked securities (ILS) fund manager, or an individual or club group of investors, seeking to transform a collateralised reinsurance contract or industry loss warranty (ILW) into a securitised cat bond format to meet investment fund mandates.
In this case, given the relatively small size of this Series EX transaction it’s likely that this deal has been securitised and issued for an ILS fund or single ILS investor.
This EX transaction features roughly $8.311 million of ILS notes that have been issued by Artex SAC Limited using its ILS Note Program II and represent an EX Notes segregated account. The notes have been placed with qualified investors and listed on the Bermuda Stock Exchange (BSX) as insurance related securities, with a due date of June 8th 2018.
Typically these private cat bond transactions involve peak property catastrophe reinsurance perils (often U.S.) and feature triggers based either on an industry loss or an indemnity structure basis. Increasingly though, we’re told there is interest in transforming collateralized marine or energy reinsurance contracts in this way among some investors.
Platforms like the Artex SAC Limited vehicle and its associated note programs help investors and ILS fund managers to access reinsurance risks in securitised, cat bond-like form more cheaply and from smaller transactions than the main 144A cat bond market would allow.