Bedell Cristin in Guernsey has recently advised
on a groundbreaking CAT bond transfer.
Partner Mark Helyar and his team advised Swiss ILS managers Solidum Partners AG on a private transformer
of catastrophe risks into $12.4m of securities in three separate
deals through a Guernsey based incorporated cell structure, Solidum
Advocate Mark Helyar said: "Those in the insurance industry
in Guernsey will know that I have long espoused the opportunity for
Guernsey to benefit from insurance and reinsurance transformer
transactions of this sort given that we have the right cocktail of
specialist professional disciplines and a respected regulatory
framework operating within the European time zone.
"It is fantastic for Bedell and for Guernsey to have
advised on the development of an effectively new product with our
client Solidum Partners, particularly at a time when there is
likely to be considerable global demand for investment in
"The firm's acknowledged international expertise** in
the specialist use of PCC and ICC structures for investment and
insurance purposes has been of particular use in this series of
transactions by ring-fencing risk whilst maintaining repeat
transaction costs as low as possible for both our client and
After a string of natural disasters in the US and Japan in
recent months, the catastrophe reinsurance market is touted by
industry experts to harden considerably and many investors are
considering the benefit of returns from investment in
provision of capital for reinsurance programmes which will command
higher premiums over coming years.
They mark a deepening of the market for smaller, more
streamlined indemnity cat bond transactions that are fully tradable
in the secondary market. The notes are unrated with no external
modelling and no investment bank required for structuring. In what
was also described as another first for the sector, the most recent
"Jungfrau" transaction incorporates reinstatement for
2011 financed by the issue of second loss notes, and also
introduced new sponsors to the CAT bond market.
The trade was also described by the press as "a significant
step for the collateralised reinsurance market, as it demonstrated
trading liquidity for an instrument that previously was bought by
investors to hold until maturity.*
*typically CAT bonds pay out a fixed return at maturity if there
is no underlying claim on the reinsurance contract(s) or tranches
of risk which they ultimately capitalise. This structure enables
the bonds to be traded, for example, after the end of the hurricane
season but prior to maturity. No-loss returns over US T-Bills for
the Jungfrau, Pollux and Dom series transactions range between 7.5%
and 29.5% for a 12 month investment.
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