MS Amlin completes first ever Singapore ILS renewal, with Phoenix 2 Re sidecar

Re/insurer MS Amlin has again returned to the capital markets to source catastrophe retrocession through a renewed quota share arrangement via reinsurance sidecar vehicle Phoenix 2 Re Pte. Ltd., lifting the coverage available to the company from the sidecar program to almost $87.5 million in the process.

This is the first ever renewal of a Singapore domiciled insurance-linked securities (ILS) structure, so a notable transaction for that reason.

Special purpose reinsurance vehicle (SPRV) Phoenix 2 Re Pte. Ltd. was established in Singapore for a $37.5 million Series 2022-1 issuance of sidecar notes that came to market in late 2021.

Now, the same SPRV has been used for a second time as MS Amlin, through its Singapore based subsidiary MS Amlin Asia Pacific Pte. Ltd., looked to secure an enlarged slice of catastrophe reinsurance and retrocessional protection for the Asia region.

This is now the fourth Phoenix Re collateralized and securitized sidecar transaction and notes issuance for MS Amlin Asia Pacific.

The first Phoenix sidecar deal for the 2021 underwriting year was $42.14 million in size, while the second issuance that used the Phoneix 2 Re SPRV saw the arrangement shrink slightly to $37.5 million for the 2022 underwriting year.

A year ago, MS Amlin sponsored its third capital market arrangement that provides it with Asian property catastrophe retrocessional protection, upsizing the collateralised reinsurance sidecar arrangement, as Phoenix 3 Re Pte. Ltd. came out at $45 million in size.

Now, in renewing Phoenix 2 Re, MS Amlin has secured a further $35.25 million in retrocessional protection from its Asia catastrophe risk focused sidecar program, thanks to this fourth issuance in the Phoenix Re series from the company. Which takes the sidecar program’s total protection outstanding to almost $87.5 million, we understand.

The company hails today’s news as a “world-first Singapore ILS renewal.”

It is the first ever renewal of an SPRV ILS transaction in Singapore, demonstrating the ability to re-use the structures which is a key feature of any insurance-linked securities (ILS) marketplace, which is a key milestone for the country.

However, it is important to note that this isn’t a catastrophe bond.

We’re told the Phoenix 2 Re transaction remains a collateralized quota share deal, with a note issuance that is destined to be listed on the Singapore Exchange.

It’s effectively a renewal and extension of the Phoenix 2 Re deal from 2022, with the same cession percentage on the underlying quota share reinsurance arrangement, which we understand to have been extended.

As such it’s more a sidecar note issuance, than a catastrophe bond, providing investors with access to multiple layers of catastrophe risk from the Asian marketplace via a quota share with MS Amlin Asia Pacific.

The business ceded is higher attaching layers of Asian catastrophe risk, so the quota share is only across a portion of the MS Amlin Asia Pacific book.

While, the resulting notes that are issued do look very similar to a cat bond to investors, the structure differs and the form of coverage that underpins the arrangement as well. These notes are not featured in catastrophe bond broker-dealer secondary market pricing sheets.

They are tradable though, like many of the listed sidecar participating note issuances we have covered over the years, although typically these structures do not exhibit much liquidity, in terms of actual trading (compared to cat bonds). They are similar to a cat bond lites, in terms of the securitization process and issuance of notes, albeit they are quota share arrangements under the surface.

As a result, we don’t include the Phoenix Re deals from MS Amlin in our catastrophe bond Deal Directory. Instead, we list them in our extensive reinsurance sidecar directory.

MS Amlin said that this Phoenix Re sidecar renewal saw collateralized retro reinsurance capacity secured through a number of investors worldwide.

It hopes this first renewal of a Singapore ILS arrangement will “allow for more capacity to the local market, as well as increased reinsurance capacity for insurers, enabling more natural catastrophe cover to be written.”

MS Amlin Asia Pacific worked alongside the Monetary Authority of Singapore (MAS) to set up Phoenix 2 Re in 2022, benefiting from an insurance-linked securities (ILS) catastrophe bond grant.

Hong Kong-based ILS specialist ILS Advisers, part of the HSZ Group, has worked on all the Phoenix Re deals for MS Amlin, assisting with the structuring and helping market the arrangements to investors.

We’re told this 2024 issuance from Phoenix 2 Re featured three tranches of notes, each providing one year of coverage, but with the ability to extend or redeem, up to 2038.

The Phoenix 2 Re 2024 deal sees $35.25 million issued across the three tranches of notes.

Class A – $8.625m
Class B – $19.625m
Class C – $7m

In total, we understand there are almost $87.5 million of notes outstanding from the Phoenix Re sidecar series sponsored by MS Amlin.

Will Ho, CEO, MS Amlin Asia Pacific Pte Ltd, commented, “We are excited to have completed Singapore’s first ever catastrophe bond renewal, and our fourth transaction in the Phoenix Re series. This milestone confirms our commitment to Singapore’s expanding ILS market, and highlights the hub’s growing importance as a conduit for investment in Asia. We see strong growth opportunities in the region’s attractive ILS market, and have ambitious plans to further expand our Phoenix Re series. We are also exploring other Singapore-based risk transfer solutions to support global investors, increase insurance capacity in Asia, and help close the region’s insurance protection gap.”

Tim Yip, Head of ILS, ILS Advisers, added, “We are delighted to have been able to provide our ongoing support, alongside the Monetary Authority of Singapore (MAS), to MS Amlin as they further their leadership role in expanding the Asia ILS market with the launch of their fourth Phoenix series. It is extremely rewarding that not only have the majority of investors renewed their commitment to the programme, but also to welcome new investors who have contributed additional capacity, demonstrating confidence in this opportunistic and promising region.”

The three tranches of 2024 notes issued by Phoenix 2 Re Pte. Ltd. will be listed on the Singapore Exchange.

For details of many reinsurance sidecar investments and transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.