Vantage Risk, the insurance and reinsurance start-up launched by industry veterans Greg Hendrick and Dinos Iordanou, is in the market to sponsor its first catastrophe bond, with a $150 million Vista Re Ltd. (Series 2021-1) North American multi-peril deal.
Vantage has set up Vista Re Ltd. as its vehicle for the issuance, a Bermuda domiciled special purpose insurer (SPI) and now targets securing $150 million of reinsurance protection from capital markets investors, through an industry loss trigger deal, our sources explained.
It’s encouraging to see a new start-up looking to access the appetites of insurance-linked securities (ILS) investors so soon after its launch.
As we’d previously reported, Vantage has already established its first insurance-linked securities (ILS) vehicle in Bermuda earlier this year, a collateralized insurer class company named AdVantage Retro I Ltd.
Now, with a Vista Re Ltd. SPI available to issue cat bonds through, it looks like Vantage will make the capital markets a core component of its retrocessional reinsurance arrangements.
Vista Re Ltd. will look to issue a single tranche of Class A Series 2021-1 notes, currently targeted at $150 million, which will be sold to ILS and cat bond investors and the proceeds used to fully-collateralize a retro reinsurance agreement between Vista Re and Vantage Risk Ltd.
The currently $150 million of protection this provides will cover Vantage Risk for certain losses from North American named storms and earthquakes, including the United States, Puerto Rico, U.S. Virgin Islands, D.C. and also Canada for earthquake risks.
The retrocessional reinsurance protection will be provided on an industry loss trigger basis, which is state weighted and calculated over annual risk periods to provide aggregate coverage, with PCS as the reporting agency in the case of all perils.
This first Vista Re catastrophe bond will provide Vantage Risk and its subsidiary underwriting entities with reinsurance protection from the capital markets across a three-year term.
We understand that a $15 million franchise deductible will apply for every qualifying catastrophe event, while the notes attachment point will initially be set at $200 million of losses, covering Vantage Risk up to $375 million of losses.
The $150 million of Series 2021-1 Class A notes to be issued by Vista Re Ltd. will have an initial expected loss of 3.32%, we are told, while the notes are being offered to cat bond funds and investors with price guidance in a range from 7.25% to 7.75%.
Vantage Risk’s first ever catastrophe bond is expected to be issued in May, providing plenty of time for its marketing and investor feedback.
Given the pedigree of Vantage’s underwriting team, we’d expect the company to achieve good execution for its first cat bond issuance, which should keep the company coming back as a regular sponsor.