Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Third Resilience Re private cat bond has maturity extended by a year


A third private catastrophe bond transaction issued through the Willis Towers Watson owned Resilience Re Ltd. insurance-linked securities (ILS) issuance platform now has its maturity date extended by a further year, likely to allow for development of potential losses.

tape-measureThe $37 million Resilience Re Ltd. (Series 1861A) privately arranged and placed catastrophe bond transaction was issued for the June 2018 reinsurance renewals and its term ran for a year.

Over that period we’ve seen some major global catastrophe losses, ranging from the California wildfires, to hurricane’s Florence and Michael, all hitting the United States, as well as the typhoons including Jebi striking Japan as well.

It’s not clear the precise reason for the extension of maturity at this time, but it is likely to be because this Resilience Re 1861A catastrophe bond covers a layer of risk that is exposed to some or all of these catastrophe events.

As a result and if this is the case, the sponsor of the deal or ceding company may have requested for the extension of maturity to allow for its losses to further develop, to identify whether it will be able to make any recovery under the private cat bond issue.

Two other Resilience Re cat bonds, the $63 million Resilience Re Ltd. (Series 1711A) and the $173 million Resilience Re Ltd. (Series 1741A) has their maturity dates pushed back already.

However, being private ILS deals it is very hard to know whether these actually result in any reinsurance recovery for the ceding client.

This latest Resilience Re 1861A transaction, which was an issuance of $37 million discounted zero coupon notes that are exposed to certain property catastrophe reinsurance risks, has now had its maturity date pushed back to June 6th 2020.

There is a reasonable chance that this private cat bond provides aggregate reinsurance or retrocession, potentially on a multi-region basis. The reason we suggest this is that the U.S. wind season in 2018 was not as impactful as 2017 and while the wildfires were and so too Jebi, it seems more likely that this deal may have been hit by more than one event so far and hence waiting for further development across a number of catastrophes.

With the fate of this private cat bond still unknown, we have it listed on our page detailing catastrophe bond defaults and potential payouts.


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