PEMBROKE, Bermuda--(BUSINESS WIRE)--AlphaCat Managers, Ltd. (“AlphaCat”) and Ledger Capital Markets, LLC (“Ledger”) announced today the direct securitization of a non-standard passenger auto insurance portfolio.
The transaction brings a new class of business to insurance-linked securities (ILS) investors and includes a private placement of two tranches of notes amounting to $10M, including a $6.67M senior note. The $3.33M junior note will pay ILS fund investors retained earnings after payments made to support the senior tranche. The junior tranche acts as a profit and loss share with the MGA. The funding for both notes is variable with just-in-time capital contributions designed to closely match any increase in risk as the underlying auto insurance portfolio grows.
Lixin Zeng, Chief Executive Officer of AlphaCat commented: "We’re pleased to lead the ILS market expansion beyond property catastrophe and reinsurance sourced risks. This facility’s novel structure enables MGAs to upsize more nimbly and AlphaCat to deploy our clients’ capital more efficiently.”
This is the first transaction for Ledger acting as the structurer and bookrunner for a bilateral ILS transaction between an MGA and ILS fund.
Samir Shah, Chief Executive Officer of Ledger Investing commented: "This innovative transaction creates new ILS market opportunities in securitizing broader classes of insurance risk. We look forward to working with more MGAs and insurers.”
AlphaCat is the global brand used by AlphaCat Managers Ltd., a Bermuda based investment adviser managing capital for third parties in insurance linked securities and other property catastrophe reinsurance investments. AlphaCat helps investors find opportunities in private reinsurance transactions and catastrophe bonds, an asset class with low correlation. AlphaCat is a member company of AIG. To learn more, visit acmanagers.com
Ledger Capital Markets, LLC is the broker-dealer entity of Ledger Investing, Inc., an insurance technology (insurtech) and insurance-linked securities (ILS) startup. Ledger streamlines the securitization of insurance and reinsurance risks and helps expand the ILS market into new risks and classes of business.