Ledger completes $250m syndicated secondary casualty ILS trade

Ledger Investing, the insurance technology (insurtech) and insurance-linked securities (ILS) focused company, has completed a significant new secondary trade of casualty ILS assets totalling $250 million and said that it is seeing growing institutional investor interest.

What’s more this was a syndicated secondary transaction of casualty ILS from Ledger Investing to three institutional investors.

Ledger said that the secondary casualty ILS trade consists of nearly $250 million in premium, representing a diversified portfolio featuring four lines of insurance business, including Workers’ Compensation (WC), General Liability (GL), Private Passenger Auto (PPA), and Commercial Automobile (CA), encompassing 25 individual programs.

Ledger said there was “considerable interest from investors” and that approximately $80 million of capital has been invested to support the trade.

Importantly, Ledger notes that the transaction is a fully collateralized securitiztion up to the reinsurance limits.

This gives the insurers better security than traditional reinsurance, Ledger said, while still targeted to meet the double digit return thresholds of investors backing the risk.

“Many said that it isn’t possible to securitize casualty risk, and yet we have securitized over $1 billion of premium since our first transaction in 2019,” Samir Shah, Ledger Investing CEO commented.

“They said it was not possible to create liquidity in casualty risk, and now we have shown that indeed it is possible to create a secondary market,” Shah added.

Ledger said that it is seeing “robust demand from institutional investors for securitized casualty risk,” with particularly strong demand being shown by private credit and special situations funds.

“The interest for this risk is driven by its similar target returns and weighted average life (WAL) while offering a return stream uncorrelated to the rest of their portfolios,” the company explained.

The company noted that this significant secondary and syndicated casualty ILS trade shows its “commitment to delivering innovative financial solutions that create value and generate liquidity in the casualty insurance-linked securities (ILS) market.”

Shah also said, “We look forward to unlocking the full potential of casualty ILS as we redefine the future of capital management for insurers and investment strategies for asset allocators.”

Alex Freiberg, CEO, Ledger Capital Markets, LLC, also commented, “The increasing demand from sophisticated financial institutions for casualty ILS affirms its multi-pronged value proposition within private credit, absolute return, and other areas of client portfolios. We recognize the immense potential casualty ILS holds in providing both stability and diversification to our investors’ holdings. We’re excited to be at the forefront of this emerging and highly attractive asset class.”