Twelve Capital completes $15m Dodeka 2024-1 private catastrophe bond
Twelve Capital, the Swiss headquartered insurance-linked securities (ILS) and reinsurance investment manager, has successfully completed a new $15 million Dodeka 2024-1 private catastrophe bond, which is the manager’s twenty seventh issuance in the Dodeka series.
It’s the first Dodeka private catastrophe bond, or cat bond lite, that Twelve Capital has arranged since July 2019 though.
The ILS investment manager’s use of the Dodeka private cat bond series stopped at a time that the market for collateralized reinsurance and retrocession arrangements had stalled somewhat, while Twelve Capital’s focus had shifted more towards its portfolios of 144A catastrophe bonds, which have grown significantly since that time.
Now, Twelve Capital has returned and we understand is once again utilising the private cat bond arrangement as a way to source risk for fund strategies, taking a more private reinsurance or retrocession arrangement and transforming and securitizing it into something its cat bond strategies can invest in.
These Dodeka private cat bond arrangements see the ILS fund manager sourcing risk in reinsurance or retrocession form and then arranging the transformation of the risk into a private cat bond, to provide investable notes with secondary liquidity for its cat bond funds.
We understand that, like most Dodeka cat bond deals, this new 2024-1 issuance features a transformed industry-loss warranty (ILW) arrangement.
The Dodeka transactions are a useful way for the ILS fund manager to source new risk to fit its portfolio needs, in a liquid form, and can also add incremental risk investment opportunities at a time when the primary cat bond market may lack the exact transaction form and structure Twelve Capital seeks.
This 27th Dodeka private cat bond transaction has been issued around the mid-year renewal season and its risk period runs through till December 2024, with maturity scheduled for the 27th, suggesting it could be a U.S. wind reinsurance or retrocession cover for the current season.
This latest Dodeka 2024-1 transaction saw $15 million of notes issued, sold to qualified investors in a private placement and listed on the Bermuda Stock Exchange (BSX), further enhancing the liquidity of the resulting notes for funds or specific investment mandates.
The transformer and issuing vehicle used is as usual one managed by Artex, in this case Artex Axcell Re (Bermuda) Limited, which is the same structure (although renamed) that has been involved in every Dodeka private cat bond arrangement to-date.
The vehicle acted in respect of a Segregated Account named Dodeka 2024-1 to issue the $15 million of ILS notes, under its ILS Note Program II.
The Dodeka 2024-1 private cat bond features term running through the wind season, with maturity due December 27th 2024.
Added together, Twelve Capital’s now 27 Dodeka private cat bond transactions have resulted in over $500 million of risk capital sourced, transformed and issued in catastrophe bond form since 2014.
Details on every Dodeka private cat bond transaction can be found in the Artemis Catastrophe Bond Deal Directory. Use the filters to view just private cat bonds (filter by type).
The resurrection of the Dodeka private cat bond program, reflects ILS fund manager Twelve Capital’s commitment to sourcing reinsurance risks in securitised cat bond form to satisfy its ILS fund investors.
It also perhaps indicates a growing appetite to source more risk in private form as well, with more attractive investment opportunities perhaps seen as available in that collateralized side of the reinsurance market.
We’ve added this $15 million Dodeka 2024-1 private cat bond transaction to the Artemis Deal Directory and what data points we have on the arrangement will be included in our catastrophe bond and ILS market statistics.
