Hong Kong headquartered global reinsurer Peak Reinsurance Company Limited (Peak Re) has now revealed that it successfully renewed its Lion Rock Re fully collateralised reinsurance sidecar at a larger size of $107 million for 2021.
As we reported back in January, Peak Re was in the process of renewing its sidecar vehicle for 2021, as a first almost $15.62 million tranche of Series 2021-1 notes had been issued by its Lion Rock Re Ltd. special purpose vehicle.
This listed tranche coming to light separately from the full sidecar renewal announcement is typical for the structure, having occurred a year earlier as well.
Now, Peak Re has reported that the Lion Rock Re Ltd. reinsurance sidecar is some 39% larger this year, with $107 million of capital raised from investors to support the structure, up from $77 million in 2020.
Peak Re’s Lion Rock Re reinsurance sidecar provides the company with access to efficient retrocessional capacity from the capital markets, through an aligned risk sharing arrangement with third-party institutional investors.
Lion Rock Re was the first sidecar transaction from an Asian sponsor and now after repeated issuances is clearly gaining increasing investor support, while playing an increasingly important role for Peak Re in supporting its business growth.
So Peak Re’s relationships with insurance-linked securities (ILS) investors continue to expand, helped also by the reinsurers acquisition of its own ILS manager last year.
The reinsurer first launched the Lion Rock Re Ltd. Bermuda domiciled sidecar structure in late 2018, with a $75 million issuance that ceded a slice of its global property catastrophe reinsurance book to high-quality global investors in time for the 2019 underwriting year.
Peak Re renewed the Lion Rock Re sidecar for the 2020 underwriting year, with a $77 million Lion Rock Re II issuance that came to market at the beginning of last year.
After that 2020 issuance, a $12.32 million tranche of notes that were part of the 2020-1 Lion Rock Re issuance were listed on the Bermuda Stock Exchange (BSX), as Peak Re sought to deliver a participation in its sidecar vehicle in the listed format an, or a number of, investors required.
So, for 2021, we have already reported on the $15.62 million tranche of listed Series 2021-1 notes, but that clearly wasn’t the whole issuance, as Lion Rock Re has $107 million of investor support for the 2021 underwriting year, Peak Re said.
Franz Josef Hahn, Chief Executive Officer of Peak Re, commented on the successful sidecar placement, “ILS has become an integral part of Peak Re’s retrocession strategy, and we have been building up our ILS capabilities since the launch of the first sidecar vehicle in 2018. We will continue to provide innovative options for investors and bring more capacity to narrow the protection gap in the emerging middle-class society in Asia.”
Peak Re also noted the fact that the market has been more challenging around this renewal, so the fact it has received upsized support from ILS investors is testament to the track-record it is now developing with the Lion Rock Re sidecar, which promises to cement the structure as a core component of the reinsurers capital arrangements.
Aon Securities LLC, in collaboration with Aon Capital Partners, acted as the structuring and placement agent for the Lion Rock Re 2021 renewal transaction.
For details of many reinsurance sidecar investments and transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.