Fidelis’ Socium Re collateralised sidecar issued shares for 2022

Fidelis Insurance Holdings Limited, a specialist underwriter of insurance and reinsurance, appears to have performed a renewal transaction of sorts under its Socium Re collateralised and quota share focused reinsurance sidecar for 2022, Artemis has learned.

Fidelis has been utilising the Socium Re Ltd., Bermuda-based special purpose insurer as a collateralised reinsurance sidecar since 2018.

Socium Re Limited provides collateralised retrocessional capacity support for Fidelis’ reinsurance portfolio and the company began to use the structure in 2018 as a way to bring third-party investor capital into its business, in an aligned manner.

Typically, Fidelis will enter into a quota share arrangement with Socium Re, while Socium Re will issue and sell notes or shares to third-party investors, with the proceeds of the sale used to collateralise the quota share retro reinsurance arrangements, that are normally structured to cover some of the firms property or catastrophe reinsurance exposure.

Fidelis is in the enviable position of being able to access underwriting business in excess of its own risk appetite, so by using Socium Re, alongside other insurance-linked securities (ILS) structures, it is make the most of the excess opportunity and share that excess capacity opportunity with investors and other partners.

The company used Socium Re for a growth opportunity for the 2021 underwriting renewals, with Socium Re issuing $285 million of notes to provide capital to back a portfolio of worldwide retrocession, at a time when market capacity was dented.

So the company has used the structure both as a core quota share vehicle and then also as a strategic route to source capacity for more opportunistic growth.

For 2022, we’re told that Socium Re Ltd. has issued a new tranche of Series 2022 preference shares, which are said to have been used to bring in third-party investor capital to support a new quota share arrangement for this underwriting year.

The Socium Re sidecar issuance closed right at the end of December 2021, so came into effect in time for the start of 2022, we understand.

Fidelis prides itself as a risk originator, which makes partnering with the firm attractive to investors.

The re/insurer has been able to capitalise on this, while continuing to utilise the Socium Re sidecar vehicle and other private quota share arrangements with investors, right through the more challenging fundraising environment for these structures and while retrocessional capital has become increasingly in-demand.

Historically, Socium Re has at times also issued tranches preference shares around the mid-year renewal season for Fidelis as well, enabling the re/insurer to make use of third-party capital within its business across key renewal cycles in the reinsurance market.

For more details on reinsurance sidecar investments view our directory of collateralized reinsurance sidecar transactions.