GC / MMC’s Isosceles ILS platform in $90.5m private cat bond issuance

Isosceles Insurance Ltd., the Bermuda-domiciled private insurance-linked securities (ILS) and catastrophe bond platform operated by Marsh McLennan and reinsurance broker Guy Carpenter, has completed the issuance of three new series of cat bond notes, totalling $90.5 million of capital markets backed capacity secured for clients.

Isosceles Insurance Ltd. (or Isosceles Re as it’s also known) is an ILS platform that was established in early 2020 as a private ILS and private cat bond (or cat bond lite) issuance platform.

It gave the broking group’s a way to collaborate on accessing the capital markets for reinsurance for their clients, as they put to use a rent-a-captive vehicle inherited when MMC acquired JLT.

The Isosceles Re vehicle issues 4(2) or 4(a)(2) securities, so private securities placements including privately placed catastrophe bonds, insurance-linked securities (ILS) and also the securitisation of other transformed collateralised reinsurance arrangements.

Since its launch, a number of Isosceles Re private cat bond transactions have been listed in our extensive catastrophe bond and related insurance-linked securities (ILS) Deal Directory.

We now add three more, as three new private cat bond note series have been issued by Isosceles Re, with five tranches of notes included and amounting to $90.5 million in risk capital issued.

As with every private ILS or cat bond deal we encounter, details are limited, so we’ve had to make some assumptions in order to include these Isosceles Re private ILS transactions in our catastrophe bond Deal Directory.

Also, while we’ve listed these as July cat bond transaction, it is possible they were completed earlier, perhaps during June.

Isosceles Insurance Ltd. has issued $60.5 million of Series 2022-A notes, with three tranches of privately placed insurance-linked notes, or private cat bonds sold to investors.

The notes will have been sold to provide collateral to underpin a reinsurance or retrocession agreement.

Isosceles Re issued a $31.5 million tranche of Series 2022-A Class A notes, a $12.5 million tranche of Series 2022-A Class B notes and a $16.5 million tranche of Series 2022-A Class C notes, all of which have due dates of May 5th 2023.

In addition, Isosceles Insurance Ltd. has issued a single $11 million tranche of Series 2022-B notes, that are due June 7th 2023.

As well as a single almost $19 million tranche of Series 2022-C notes, that are also due June 7th 2023.

For a total issued of $90.5 million, across the three series and five tranches of private cat bond notes placed.

All five tranches of notes have been structured as discounted zero coupon participating notes, which is ypical of a private ILS transformation of a collateralised reinsurance or retrocession contract, converting it into something more liquid and investable as a security, usually for a cat bond specific fund or ILS strategy.

As we do with every private ILS or cat bond deal, until we learn more details, we assume these cover property catastrophe reinsurance or retrocession risks.

The risks will have been transformed to enable an ILS fund or investor to source an asset that meets a catastrophe bond mandate, offering greater options in terms of secondary liquidity, or simply so a cedant can access the capital market for protection in a more efficient manner than a full 144A cat bond process.

Private ILS or cat bond lite arrangements tend to fit into one of a number of use-cases, as a straight collateralised reinsurance or retro cover for a carrier, that has been transformed and securitised, to either be assumed by a single ILS fund or investor, or a small group of funds/investors.

Or, they can represent ILS fund-to-fund transactions (hedging), or the transformation of a specific risk transfer arrangement, such as an industry-loss warranty (ILW).

Reinsurance broker Guy Carpenter’s dedicated capital markets unit GC Securities will have structured the transaction and acted as a bookrunner for this Isosceles Insurance Ltd. private ILS transaction. While Marsh Management Services is likely to have acted as the insurance manager for the vehicle itself.

We’ve added all three of the new series of private cat bond notes as Isosceles Insurance Ltd. (Series 2022-A), Isosceles Insurance Ltd. (Series 2022-B) and Isosceles Insurance Ltd. (Series 2022-C) in our extensive cat bond Deal Directory.