Source: Artemis. Click here to view original publication (10th
Exchange Re, a platform for collateralised reinsurance or
cell-based ILS transactions and the first to be launched in Malta,
has now received official approval to begin business by the Malta
Financial Services Authority (MFSA).
Exchange Re, or Exchange Re SCC Limited to give its full name,
pitches itself as the first "ILS platform in Malta for private
collateralised reinsurance transactions organised as a
securitisation cell company (SCC)," and launched earlier this
year when it received approval in-principle from the MFSA.
Exchange Re is owned and operated by insurance and captive
management specialist USA Risk, which has a strong foothold in
Malta and took the opportunity to launch the first reinsurance
special purpose vehicle (RSPV) on the island as it sought to
capitalise on the appetite to bring ILS and collateralised
reinsurance business to the domicile.
That in-principle approval has now been formalised and Exchange
Re was authorised by the MFSA on Monday 8th of August 2016, giving
it the go-ahead to begin facilitating ILS business in Malta, as the
domicile advances its mission to become a European ILS hub.
Malta is within the European Union so could be an attractive
option for ILS funds or investors looking to locate a
collateralised reinsurance vehicle within the EU.
John Tortell, General Manager of Exchange Re SCC Limited, told
Artemis of his pleasure in receiving full authorisation from the
Malta Financial Services Authority, following the in-principle
approval earlier in the year.
"We aim to provide a full quality service to clients and
look to other service providers to use this open platform for their
clients. In keeping with the ever developing ILS market Exchange Re
and Malta offer a credible and interesting alternative Solvency II
approved domicile which will attract both cedants and
investors," Tortell explained.
Dr Matthew Bianchi, an insurance partner at law firm GANADO
Advocates who were entrusted with the application process and
establishment of the structure stated that GANADO Advocates were;
"Delighted to have supported with the set up of the first RSPV
SCC ILS platform in the European Union and are confident that this
vehicle will pave the way to develop a robust collateralized
Reinsurance market in Malta."
Being fully compliant with the EU Solvency II Regime could be
attractive for some ceding re/insurers that want to enter into
collateralised reinsurance deals with ILS funds or investors.
Additionally, Exchange Re said that it aims to offer lower costs
and quicker set-up time for individual collateralised reinsurance
transactions, which will also be attractive for re/insurers that
want to try out an ILS layer of coverage within their program.
Exchange Re follows the segregated cell company (SCC) structure,
enabling segregated cells to be used to separate assets and
liabilities associated with collateralised reinsurance transactions
within the vehicle.
Now open for business, Exchange Re and USA Risk need to attract
an ILS or collateralised reinsurance deal to Malta, as proving the
concept within a new regulatory environment is important to
demonstrate to the ILS asset class that the structure
'works' and Malta is open for ILS business.
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