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Twelve Capital issues $76.8m of new Dodeka private cat bonds


Specialist insurance-linked securities (ILS) and reinsurance investments manager Twelve Capital has successfully completed issuance of $76.8 million of new private catastrophe bonds through its Dodeka series of transactions.

The Dodeka private catastrophe bond (or cat bond lite) series of deals are privately arranged and placed insurance-linked securities (ILS) arrangements, which are part of Twelve Capital’s strategy to source property catastrophe risks in securitised and liquid form for its ILS fund mandates and investors.

These privately securitized and placed cat bond arrangements allow Twelve Capital to transform property catastrophe reinsurance and retrocession risks, typically an industry-loss warranty (ILW), into an investable form suited for its liquid cat bond fund strategies.

Twelve Capital has completed three new Dodeka transactions, taking the series to twenty-two transactions in total, amounting to roughly $437 million of risk capital securitized and issued through the program since its inception in January 2014. Details on every Dodeka private cat bond can be found in the Artemis Deal Directory.

Of course, as well as benefiting Twelve Capital these private cat bonds are also an attractive way for the ceding companies to access the investor capital backing these more liquid ILS strategies as well.

Speaking to Artemis, Aaron Coates, Executive Director, Sourcing, Twelve Capital (UK) Ltd., explained, “We are seeing an increasing demand from our cedants for our Dodeka private cat bond product and will be looking to expand our Dodeka issuance as we move through 2019.”

The three new Dodeka’s have been completed in the last few days and all $76.8 million of notes issued are to be listed on the Bermuda Stock Exchange (BSX).

The first transaction is a $25.181 million Dodeka XVIII issuance, which saw the issuing vehicle, Artex SAC Limited, acting in respect of a Segregated Account named Dodeka XVIII to issue the notes.

The second, is a $27.609 million Dodeka XIX issuance, which again saw the Artex SAC Limited vehicle acting on behalf of a Dodeka XIX segregated account to transform the risk and issue the notes.

Finally, the third new private cat bond transaction from Twelve Capital is a $23.936 million Dodeka XX arrangement, where Artex SAC Limited acted for segregated account Dodeka XX to transform the risk and issue the securitised notes.

All three of the new Dodeka private cat bonds cover a one-year term, with maturity due January 9th 2020.

As ever, details are scarce given the private nature of the cat bonds, but we assume that as part of the Dodeka series these are likely to be transformed industry-loss warranties (ILW’s) providing reinsurance or retrocession to an unamed ceding company, most likely featuring U.S. property catastrophe risks.

ILS manager Twelve Capital looks set to continue using the Dodeka series of private catastrophe bonds, to benefit from an effective way of providing capital markets backed reinsurance coverage to counterparties, while the sourced catastrophe risk is transformed to securitised note form, offering potential liquidity for its ILS investment funds.

We’ve added the $76.8 million of new Dodeka private cat bonds to the Artemis Deal Directory and what information we have will be included in our catastrophe bond and ILS market statistics.

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