Randolph Re, a new private catastrophe bond issuance and placement platform has been launched by the capital market’s arm of insurance and reinsurance broker Aon.
Aon Securities, the insurance-linked securities (ILS) focused arm of the broker, already had the CATStream offering, which was launched in 2014 and designed to streamline the issuance of catastrophe bonds and as a result access to the capital markets for its insurance and reinsurance clients.
Randolph Re is designed to broaden the scope of Aon’s ILS offering, giving it a dedicated platform from which private placement cat bond transactions of $25 million in issuance size and above can be executed.
Private placement cat bonds placed using Randolph Re will actually be will be issued through Aon’s special purpose vehicle White Rock Insurance (SAC) Bermuda Ltd, with its insurance management unit Aon Insurance Managers servicing the deals.
The company said that Randolph Re will help its clients benefit from syndicated collateralized reinsurance or retrocession cover streamlined manner across the transaction from deal execution to the documentation process.
In addition, any private placement catastrophe bonds issued by Randolph Re will automatically be tradeable in the secondary market, the company said, and Aon Securities own trading desk will support them in the secondary market.
Paul Schultz, CEO of Aon Securities, commented on the news, “The Randolph Re platform represents an evolution in the firm’s private placement of catastrophe bonds. It aims to be cost effective, is designed for efficient and fast execution, and will facilitate ILS usage by a much broader range of clients that want to access the capital markets and the significant alternative capital base.
“Randolph Re enables smaller deal sizes, meaning that transactions can be integrated into various parts of re/insurance programs, allowing significant flexibility for clients. Randolph Re fits neatly into the continuum between bilateral collateralized reinsurance and more broadly syndicated catastrophe bonds.”
Private cat bond and cat bond lite platforms have proliferated in recent years, with some gaining significant traction.
They provide a useful way for smaller transactions to be syndicated and securitised, providing the notes that many investors seek while enabling ceding companies to access the capital markets in the most efficient way possible.
It seems Randolph Re will offer a more full-featured private cat bond issuance platform to Aon’s clients than its predecessor CATStream (which may still exist as an option, we cannot be sure).