Vantage launches collateralized insurer AdVantage Retro I Ltd. in Bermuda

Vantage Risk, the insurance and reinsurance start-up launched by industry veterans Greg Hendrick and Dinos Iordanou, has established its first insurance-linked securities (ILS) vehicle in Bermuda, a collateralized insurer class company named AdVantage Retro I Ltd.

We’ve learned from our sources that AdVantage Retro I Ltd., which was registered in Bermuda in December as a collateralized insurer class of company, is the first ILS or third-party reinsurance capital initiative from Vantage Risk.

The company had always been planning to make third-party capital a key component of its start-up operations, having revealed a strategy featuring the build-out of insurance-linked securities (ILS) capabilities to help in driving growth.

Vantage had also made some key hires that hinted at its ILS capabilities, including Chris McKeown (former CEO of ILS asset manager New Ocean Capital Management) and Aurora Swithenbank (former Partner and Head of Insurance in the Americas Financing Group at Goldman Sachs).

Having begun underwriting at the January renewals this year, largely with a reinsurance focus we understand, it appears Vantage also recognised the opportunity to begin its ILS operations, launching this collateralized reinsurer with what appears from the name, AdVantage Retro I Ltd., to be a retrocession focus.

We understand that Vantage is approaching its business with a multi-balance-sheet, partnership type approach, when it comes to capital sourcing.

The re/insurer aims to leverage its balance-sheet where most appropriate and other sources such as third-party capital where they make sense, so the aim is to satisfy the appetites of both types of investors and leverage one to support the other.

Given the firming of retrocessional reinsurance at the January 2021 renewals, it’s perhaps no surprise to see a collateralized retro focused vehicle launching first from Vantage.

The collateralized insurer class of company gives Vantage the flexibility to be able to use AdVantage Retro I Ltd. to satisfy the appetite of multiple investors, with each able to be segregated within the protected cell-like structure the vehicle affords.

We’re told, at this time, there is a single investor partner backing the initial launch of AdVantage Retro I Ltd. while we believe Vantage also has an aligned stake.

We expect this is just the first ILS structure from Vantage, which looks set to embrace the capital markets and investors within its reinsurance business as it grows.

AdVantage Retro I Ltd. is the third collateralized insurer class of company to be registered in Bermuda in recent weeks and it’s encouraging to see the structure gaining popularity, especially among new players and also different use-cases.

As we recently explained, Aon established Marilla Reinsurance Ltd. (Marilla Re) as a collateralized insurer class of company to support the new catastrophe reinsurance facility of the same name.

While Stable, a technology company that provides an index-based platform for commodity hedging, set up a collateralized insurer Stable Corporation Ltd. to support its insurance work and presumably reinsurance needs.