Resolute Global Partners, the insurance and reinsurance linked asset manager, has partnered with insurtech Nayms to bring to market the first industry loss warranty (ILW) to be denominated in a cryptocurrency.
Nayms, which operates a regulated Bermuda based marketplace for crypto insurance, said the crypto-denominated industry loss warranty (ILW) was issued through a segregated account within its marketplace.
The ILW sees Nayms providing US named windstorm retrocessional reinsurance covering, attaching above an industry loss trigger of $60 billion.
Nayms said that the ILW has been collateralized using the cryptocurrency USD Coin (USDC), a so-called stable coin, as the collateral within the segregated account.
The segregated account sits on Nayms independently audited Ethereum smart contract, and the company said the collateral has been secured using new mechanisms and concepts, including a digital multi-signature process, for enhanced transparency and efficiency.
“This deal demonstrates so nicely the benefits of our business model and technology for a broad range of parties and opportunities. Notably, insureds gain access to alternative capital and investors can earn a return on their crypto that is fully regulated yet not correlated to most other financial instruments,” explained Dr. David Verbeeten, Chief Commercial Officer at Nayms.
Resolute Global Partners Bermuda based reinsurance company Prospero Re is the purchaser of the ILW.
Tom Libassi, Co-Founder and Managing Partner of Resolute Global Partners, commented, “We’re proud to partner with Nayms to offer the first-ever property catastrophe reinsurance contract denominated in cryptocurrency. This contract is also the first ILW with a loss trigger based on the advanced catastrophe modeling technology behind our Footprint product, which provides coverage for severe losses along with a transparent, timely, and highly efficient way for investors to access the property catastrophe market.”
Nayms was assisted by Daniel Vestergren, CEO of Varius Capital Partners Ltd. and the former head of ILS at Hiscox Bermuda, who acted as a general advisor for the transaction.
Both the purchaser and Nayms were guided by Guy Carpenter, who acted as sole placing broker for the ILW.
It’s yet another interesting use of smart contract and crypto technology within the ILS and reinsurance space, with the potential to enable access to a new class of investor that has cryptocurrency assets and is looking for alternative sources of return.