Phoenix sidecar – Challenges the norm, delivers for investors: William Ho, MS Amlin Asia Pacific
Speaking with Artemis in a recent video interview, William Ho, the CEO of MS Amlin Asia Pacific, discussed the innovative Phoenix sidecar series of deals and explained that these challenged the norm of what is typically seen in insurance-linked securities (ILS) and the product has delivered for its investors.
Our latest Artemis Live video interview is with William Ho, CEO of MS Amlin Asia Pacific, who joined us to discuss the Phoenix sidecar series, a set of collateralized reinsurance transactions issued out of Singapore with a focus on diversifying risks from the Asia Pacific region.
Ho explained on the Phoenix sidecar series of deals, “It was something that was a bit different, a bit diversified, against a peak-zone product.
“Whilst there was a bit of scepticism whether or not we could get something like this done, we felt the timing was right, that despite it being quite a challenging time to try and raise capital, this diversification play, being something a bit different, encouraged us at MS Amlin to to push forward with this kind of project in the region.
“We felt it was a bit innovative, we wanted to challenge the norm, and establish some expectations down the line as well.”
With the Phoenix series, MS Amlin Asia Pacific is now the most consistent sponsor of insurance-linked securities (ILS) issued out of Singapore under the country’s catastrophe bond and ILS regulatory regime.
Exploring whether issuance has become easier over time, William Ho said, “Certain parts definitely got easier, particularly in terms of the application process, the discussions with the regulator, the discussions with the different legal counsel to ensure that everything’s done right. That part definitely got easier.”
Adding that, “Rewarding transactions, or fulfilling transactions, are never specifically easy, right? You know, with the challenge comes the reward.”
Ho went on to explain the track-record of the Phoenix sidecars and told us, “We’re going into our fifth year now. So, we’ve had four years of transactions on the trot. Looking back, we’ve raised over $160 million over that period of time, averaging between 8% and 9% return-on-capital. From an underwriters perspective, we ceded over $30 million of premium into these vehicles and generated less than a million dollars of losses.
“So, the track-record is building and that proof of concept is now turning into a transaction that can show it’s got a track-record and it’s got some longevity in it.”
On how investors should think about the Phoenix transaction, which remains a unique offering in the insurance-linked securities (ILS) market given its regional focus, Ho highlighted the significant diversification within the portfolio from across the Asia Pacific region.
“We would put it as, it’s about 200 to 250 mini cat bonds put together. Each individual one would not have enough critical mass or size to warrant setting up going into the ILS market on its own. However, we’ve created a portfolio of mini cat bonds, a bit more remote-risk across the region,”
He went on to tell us that, “We’ve built that portfolio over the years and shaped that portfolio to our underwriting appetite. We can show that there’s a good track record there and it’s a quota share arrangement, so we take our fair share of the risk there as well.”
Ho reiterated that, “With the capital raised to-date, having ceded over $30 million of premium with less than $1 million of claims over that four year period, we think it’s a stable investment opportunity.”
Learn more about the Phoenix sidecar series from MS Amlin Asia Pacific and the investment opportunity it presents by watching the full video interview with William Ho.
The full video interview is embedded below and can also be viewed, along with previous Artemis Live video interviews, on our dedicated video page.
You can also listen in audio to all of our interviews by subscribing to the Artemis Live podcast here.
All of our Artemis Live video interviews have a focus on reinsurance, ILS and the efficiency of risk transfer and can be accessed here.
