Isosceles private cat bonds totalling $87.6m issued

Six tranches of privately placed catastrophe bonds have been issued with a total value of $87.6 million, by Isosceles Insurance Ltd., the Bermuda-domiciled private insurance-linked securities (ILS) and catastrophe bond platform operated by Marsh McLennan and reinsurance broker Guy Carpenter.

Private cat bond issuance, at least those deals we have seen, has reduced year-on-year with, so far and including these new Isosceles deals, $379.22 million of private catastrophe bonds tracked by Artemis in 2023.

Last year saw almost $738 million issued, while 2021 saw over $1 billion of cat bond lites for the first time.

View our interactive chart where you can analyse private cat bond issuance by year.

After a slower start in 2023, private cat bond issuance is now picking up thanks to this activity from the Marsh McLennan and Guy Carpenter vehicle.

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 a way to collaborate on accessing the capital markets to source reinsurance for their clients, as they put to use a rent-a-captive vehicle inherited after MMC acquired JLT.

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

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

This latest issuance from the vehicle, the first of 2023, involves just under $87.6 million of private cat bond notes, across three series and six tranches.

The breakdown of the issuance can be seen below:

$20.7m Series 2023-A Class A notes due May 10, 2024.
$13.3m Series 2023-A Class B notes due May 10, 2024.
$11.4m Series 2023-A Class C notes due May 10, 2024.
$11.375m Series 2023-A Class D notes due May 10, 2024.
$27.15955 million Series 2023-C notes due June 7, 2024.
$3.65625 million Series 2023-G Class E notes due June 7, 2024.

All six tranches issued by Isosceles Insurance Ltd. are structured as discounted zero-coupon participating notes and have been listed on the Bermuda Stock Exchange (BSX) as insurance-linked securities (ILS).

The notes, in each case, have been privately placed with qualified institutional investors, while Appleby Global Listing Services (Bermuda) Ltd. acted as listing sponsor.

As ever, it’s not possible to know whether these are all for the same cedent, or more than one. Especially given the two different due-dates.

The four tranches of Isosceles Insurance Series 2023-A notes all have the same due-date, so could be layers of the same collateralized reinsurance arrangement, or participation. While the Series 2023-C and Series 2023-G notes may also be related, having the same due-date.

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

With private catastrophe bonds, or cat bond lites, typically the risks will have either been transformed to enable an ILS fund or investor to source a reinsurance-linked asset that meets a catastrophe bond mandate, or so that a cedant can access capital market investors for protection in a more efficient manner, than undertaking a full 144A cat bond issuance process.

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

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

Guy Carpenter’s specialist capital markets unit GC Securities is expected to have structured the transaction and acted as a bookrunner, if syndicated, for this Isosceles Insurance Ltd. private ILS transaction, while Marsh Management Services is the insurance manager for the vehicle itself.

You can analyse private cat bond issuance by year using our interactive chart.

You can also filter our Deal Directory to view only private cat bonds.

We’ve added these new Isosceles Insurance Ltd. (Series 2023-A, C, G) private cat bonds from the Isosceles vehicle to our extensive cat bond Deal Directory.