Unrivaled experience, proactive management.
Natural catastrophe (cat) bonds and other types of Insurance-Linked Securities (ILS) are typically issued to provide reinsurance protection to insurers, reinsurers, governments and corporations. The cat bonds allow companies to obtain reinsurance protection from a new pool of capital – for example, from money managers, hedge funds and pension funds – separate from traditional reinsurers. Investor capital sits in a segregated collateral account, so that if an event, such as a hurricane, occurs dedicated funds are available to make a payment, which helps to eliminate the credit risk inherent in traditional reinsurance. If there is no catastrophic or otherwise trigger event before the maturity date of the contract, the principal investment is refunded to the investors at maturity on top of the interest payments they have already received.
The ILS market has dominated new business generated in recent years with the sector now representing approximately 16% of the global property catastrophe limit purchased annually.* This growth is expected to continue based on increased investor appetite for ILS combined with the increasing sophistication of available solutions.
Leading Global ILS Services Provider
Our acquisitions of both Guernsey-domiciled Hexagon and Kane’s ILS and structured transaction administration services put Artex at the forefront of this sector. Hexagon is widely recognized for its European ILS expertise. Kane participated in one of the first cat bond issuances, which remains the model for today’s structures; the company manages over 90% of all cat bonds transacted in Cayman since 1997, and is a leading manager of Special Purpose Insurers in Bermuda. Our combined talent and expertise have established Artex as a leading global ILS services provider with scale, depth and diversity that few, if any, can match.
We tailor solutions that meet our clients’ risk requirements and deliver full-service support for all forms of ILS transactions including cat bonds, cat bond ‘lite’ structures, collateralized reinsurance transactions, transformer segregated accounts, industry loss warranties and derivative products. Our ILS administration team – the largest in the sector – works across all stages in the process, from pre-incorporation procedures through ongoing management and the handling of trigger events. We combine highly proficient administration expertise with unparalleled experience, a hands-on management style and a meticulous approach to execution certainty. Our market-wide insight and agility enable us to respond promptly to market cycles and industry-changing events and meet the demands of varying scenarios.
Segregated Cells and Transformers
We provide clients with access to the largest independent network of cell companies to facilitate access to capital markets through transformer vehicles or collateralized reinsurance transactions. Our market-leading practitioners over the years have acted on behalf of both investors and reinsurance firms alike, establishing numerous collateralized reinsurance segregated accounts and transformer segregated accounts through our international cell company platform.
Artex also owns a cellular insurance vehicle within a Protected Cell Company to provide reinsurance to Lloyd’s underwriters. This is designed for those, such as high net worth individuals, who want to share in the reinsurance market but do not have traditional access to Lloyd’s.
Special Purpose Vehicles
Special Purpose Vehicles (SPVs) are legal entities created solely to serve a particular function or transaction, such as the facilitation of a specific financial arrangement. They can take several forms and have in common the fact they are separate legal entities and are usually established to leverage legal and fiscal regimes in different jurisdictions in a cost-efficient manner. An SPV may be owned by one or more entities and many are set up with their shares owned by a purpose trust so as not to be consolidated with the remainder of the shareholder’s group. Artex not only establishes SPVs for the facilitation of ILS transactions, but also has experience in forming these structures for other purposes.
In partnership with PricewaterhouseCoopers LLP (PwC), we formed Iccaria Insurance ICC Limited, an incorporated cell facility established for mid-market pension schemes to provide them with the ability to use incorporated cells to transfer longevity risk to the reinsurance market and eliminate one area of volatility and uncertainty. The pension scheme establishes a captive insurance company to assume the longevity risk of the scheme, passing the risk on through to the reinsurance market with no retained risk. Artex provides end-to-end services for the pension scheme, including company formation and licensing, transaction negotiation and closing, and ongoing management.
Artex was also selected in 2014 by BT Pension Scheme (BTPS) to provide insurance management services for the administration of BTPS’s newly established insurance company based in Guernsey. The captive company was established to underwrite longevity arrangements to protect the scheme against costs associated with potential increases in life expectancy.
*Source – Guy Carpenter