15 February 2018Alternative Risk Transfer

MultiStrat offers insight into growing casualty-linked securities space

MultiStrat Advisers, the Bermuda-based total-return reinsurer and servicing company, has given an insight into the traction it is gaining structuring so-called casualty-linked securities (CLS) – a form of risk transfer known to be growing but many of these transactions are private.

Giving details of a recent deal, MultiStrat Advisers, operating alongside Bermuda Class 3A insurer Multi-Strat Re, said it had recently completed a CLS transferring high-frequency, low-severity casualty business backed by a $14 billion global alternative asset manager.

It said that during the programme, the investor will invest $28 million in a Bermuda-based segregated account to support total liabilities associated with $160 million in estimated written premium.

MultiStrat Advisors and Multi-Strat Re (collectively MultiStrat) arranged and conducted due diligence for the transactions. MultiStrat Re and its Bermuda-based partners will service the transactions. Storm Harbour Partners acted as the placement agent.

But it also indicated that this deal is just the tip of the iceberg. It said that in the past 12 months, it has completed multiple CLS transactions with estimated premiums of $230 million and total capital investment of $60 million.

It said the investors in these include alternative asset managers, specialized insurance funds, and established reinsurers. Classes of business covered to date include workers’ compensation and related healthcare liability, employers’ liability, professional liability and personal auto liability.

In mid-2017, the company also revealed details of deals it had done alongside Hudson Structured Capital Management, transferring the risk of workers’ compensation liabilities.

Bob Forness, CEO of MultiStrat, said: “We are pleased to expand our CLS offering with world class backers to cover both retrospective and prospective casualty reinsurance transactions. Delivering reinsurance opportunities to investors in a competitive market demonstrates the potential for CLS in the broader markets.”

Jim Robinson, CEO of MultiStrat Advisors, added: “We are pleased to continue our innovation in the CLS market. The collateral backing these transactions will be actively and conservatively managed by investors to produce incremental investment income. This Total Return profile is appealing to a broader population of investors seeking yields with less volatile, non-correlated reinsurance results.”

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