MS Amlin upsizes Asian reinsurance sidecar. Phoenix 3 Re hits $45m

Re/insurer MS Amlin has sponsored a third capital market arrangement that provides it with Asian property catastrophe retrocessional protection and for 2023 the company has upsized its collateralised reinsurance sidecar arrangement, with Phoenix 3 Re Pte. Ltd. coming out at $45 million.

MS Amlin Asia Pacific Pte. Ltd (MS AAP), the Singapore-based operation of the Lloyd’s focused re/insurer MS Amlin has established another Singapore domiciled special purpose reinsurance vehicle (SPRV) for its third ILS deal, Phoenix 3 Re Pte. Ltd.

Phoenix 3 Re provides a quota share arrangement to support to MS Amlin Asia Pacific’s protection needs, covering its select reinsurance portfolio written via its underwriting platform in Singapore.

As a result, the new insurance-linked securities (ILS) issuance complements the firm’s existing SPRV, Phoenix 2 Re, in terms of ceded business and structure.

Phoenix 3 Re has secured Over US $45 million of collateralised reinsurance capacity, more than its predecessors Phoenix 1 Re and Phoenix 2 Re.

The first Phoenix sidecar deal was $42.14 million in size, while the second saw the deal shrink slightly to $37.5 million.

MS Amlin cited an “increased underwriting risk appetite”, saying that it now benefits from US $83 million of collateralised reinsurance capacity through its Phoenix sidecar vehicles, which supports local Asian cedents given the profile of the risks the deal covers.

MS Amlin Asia Pacific worked alongside the Monetary Authority of Singapore (MAS) to establish Phoenix 3 Re, and has benefited from an insurance-linked securities (ILS) catastrophe bond grant that will have lowered the cost of issuance somewhat.

This isn’t a catastrophe bond though, it is a quota share reinsurance arrangement, akin to a sidecar transaction. The resulting participating notes that are issued do look very similar to the investors, but the structure differs and the form of coverage as well.

As with the previous Phoenix Re sidecar deals, Hong Kong-based ILS specialist ILS Advisers, part of the HSZ Group, has also worked with MS Amlin Asia Pacific and assisted in getting this deal to market.

Will Ho, CEO, MS Amlin Asia Pacific Pte Ltd, commented on the successful sidecar placement for 2023, “I am delighted we have launched Phoenix 3 Re, the latest and largest of our special purpose vehicles. Over the last two years, with the performance of Phoenix 1 and 2 Re, we have cemented our reputation and demonstrated our reinsurance credentials to investors, advisors, cedents and MAS. This has enabled us to secure more investment and offer more capacity for local cedents.

“We are in the midst of a tough trading and investment environment, so against this backdrop, the confidence shown by these important stakeholders in MS Amlin, is extremely gratifying. My thanks to everyone involved, particularly HSZ, MAS and Lloyd’s Asia for their continued support.”

Tim Yip, Executive Director, ILS Advisers, added, “With Phoenix 3 being the latest and largest supported issuance of the three Phoenix offerings from MS Amlin Asia Pacific, who again are leading the way in terms of developing investment offerings focused on emerging Asia growth.

“We are very pleased to see the continued increasing comfort level that investors are gaining with this diverse region and perils, and the value that diversifying investment opportunities can add to ILS portfolios if structured and compensated correctly.

“This is a transaction that has been issued and arranged out of Asia, supported by Asia based service providers, sponsored by an Asia based underwriting team and directly provide capacity specifically for emerging Asia, which shows that Singapore can be a hub to attract alternative capital as a source of valuable capacity to support the significant insurance protection gap facing the largest growing and most natural catastrophe exposed region in the world.”

Similar to the first two sidecars, we assume the direct beneficiary of the protection is MS Amlin Syndicate 2001’s Asia specific catastrophe reinsurance portfolio, written through its Singapore operation.

MS Amlin said that this third sidecar arrangement “renews its commitment to providing regional ILS capacity.”

It remains the only reinsurance sidecar with a specific Asian catastrophe peril only focus seen, therefore offering a unique diversification opportunity to ILS investors.

It’s good to see MS Amlin continuing to building on its Phoenix reinsurance sidecar series of deals, as the company makes them a core source of retrocesssional reinsurance capital support for its Asia Pacific catastrophe underwriting business.

You can read about this new MS Amlin sidecar transaction, alongside many other reinsurance sidecar investments and related transactions in our directory of collateralized reinsurance sidecars.