Vantage Risk sees its successful first visit to the catastrophe bond market for its $225 million Vista Re Ltd. (Series 2021-1) cat bond issuance as a step on the road to building what it terms a Partnership Capital model and developing investor relations.
As we’ve been reporting, Vantage entered the catastrophe bond market for the first time around the middle of April, as Artemis was first to report.
At first, Vantage was looking to secure at least $150 million of North American multi-peril collateralized aggregate retrocessional reinsurance, on an industry loss index basis, from its first visit to the cat bond market.
But a positive response from investors helped the company expand the issuance by 50%, to $225 million of reinsurance protection, while at the same time the pricing dropped and eventually Vantage Risk secured the coverage with strong execution thanks to investor demand for the deal.
The $225 million of reinsurance protection this provides will protect Vantage Risk against certain losses from North American named storms and earthquakes, across the United States, Puerto Rico, U.S. Virgin Islands, D.C. for named storms and also across Canada for earthquakes, running across a three-year term.
Commenting on the successful first trip to the cat bond market, Vantage’s Chris McKeown, the Group’s Chief Executive of Reinsurance, commented, “This transaction provides Vantage with complementary capital support as we build our risk portfolio. Additionally, it expands the Vantage profile among ILS investors and allows investors to grow their risk portfolios alongside Vantage.”
Aurora Swithenbank, Vantage Group CFO, also said, “We are very pleased with the reception to Vista Re’s inaugural cat bond offering, with strong investor demand allowing for a 50% upsize from the initial announced transaction size while simultaneously pricing below initial price guidance.”
As we’d also previously reported, Vantage established its first insurance-linked securities (ILS) vehicle in Bermuda in time for the start of this year, a collateralized insurer class company named AdVantage Retro I Ltd. through which investors can partner with Vantage to access certain risks it underwrites.
Now, with the successful completion of its first catastrophe bond, Vantage intends to build on these activities, as it looks to operate an aligned strategy that brings investors into its business to support its underwriting with institutional capital.
McKeown explained, “We intend to continue developing this Partnership Capital model, building it over time in a strategic way that aligns the interests of our shareholders with valued partnership capital and the broader investor market.”