Two tranches of AXIS’ Alturas Re 2020 reinsurance sidecar see maturity extended

Two tranches of preferred shares issued in 2020 by the AXIS Capital sponsored collateralized reinsurance sidecar vehicle Alturas Re Ltd. have had their maturity dates extended, presumably to allow for ongoing development of loss activity they may be exposed to.

Specialist global re/insurer AXIS Capital had first established the Alturas Re Ltd. special purpose insurer in Bermuda for the 2019 underwriting year, providing another route via which third-party investors could participate in its underwriting returns through quota share arrangements.

The Alturas Re reinsurance sidecar allowed AXIS to syndicate some of its risk to third-party investors in a securitized format, using the underlying quota shares as the risk transfer agreement and the issuance of preference shares or principal-at-risk notes as the investment asset.

Alturas Re had been used to cede both insurance and reinsurance risks to third-party investors by AXIS, and AXIS was perhaps the only sidecar sponsor to do both of these, at the time when it was a relatively heavy user of capital sourced through its sidecar structures and other private quota share arrangements.

At one time in 2018, as we reported, alternative investment specialist Stone Ridge Asset Management alone held some $657 million of investments in segregated accounts of one of AXIS’ collateralized reinsurance vehicles and that was outside of Alturas, showing how much risk the company was ceding to ILS investors at that time.

Of course, AXIS shifted away from writing property catastrophe risks and as a result its use of sidecars and quota shares also rapidly decreased, with most of the Alturas Re sidecar notes maturing on schedule.

Except for two of the tranches of preferred shares issued in 2020, that is, as Artemis has learned that the maturity dates for these has now been extended.

Back in 2020, Alturas Re Ltd. had issued 3,628 of Series 2020-3R preferred shares, and a further 3,627,248 preferred shares in the same Series 2020-3R, both tranches of were originally due for maturity at June 30th 2021.

Those maturity dates were originally extended at the beginning of November 2021, by two years out to June 30th 2023.

Now, we’ve learned that these two tranches of sidecar notes have been extended again, this time by a further two years to June 30th 2025.

It’s assumed both tranches were providing a retrocessional quota share, with the subject business AXIS’ property catastrophe reinsurance book at the time.

The further extension likely means losses are still in development from certain events that had occurred during the risk period where these sidecar notes had been exposed to catastrophes.

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.