Vesttoo, Corinthian Re reinvent sidecar with new non-cat investment fund
Vesttoo, an alternative risk transfer and investment platform, has partnered with Corinthian Re to launch what it claims to be the world’s first non-catastrophe insurance investment-grade rated feeder fund.
VESCOR will offer institutional investors rated notes securitizing dozens of underlying P&C reinsurance transactions. The first note issued will cover over $250 million in Gross Written Premiums (GWP), with an aim of covering $2 billion GWP in subsequently issued notes.
The partnership is targeting its initial investment-grade rating for issued notes by one of the world’s leading rating agencies.Corinthian will be responsible for ongoing identification, structuring and managing of the diversified underwriting portfolio, supported by Vesttoo’s AI-powered technology, modeling and financial engineering, with several banks leading the transaction placements.
Each of the transactions will include an Aggregate Stop Loss (ASL) on top of the Quota Share (QS) layer in order to maximize ratings and protect returns. This will be the first-ever investment instrument that includes both QS and ASL layers, essentially reinventing the traditional “sidecar” structure.
Vesttoo’s proprietary AI-based financial engineering will work closely with the rating agency, ensuring that the level of collateralization and probability of exhaustion are within the rating’s tolerance. Each note will meet the specific rating requirements associated with insurance industry standards.
“This is a first-of-its-kind partnership - offering investors significant investment-grade returns together with uncorrelated diversification,” said Yaniv Bertele (pictured), CEO and co-founder of Vesttoo. “We are leveraging Corinthian’s vast experience and reputation in the reinsurance and alternative risk transfer markets and combining it with Vesttoo’s tech-enabled modeling and financial engineering. It’s a unique and innovative opportunity for investors to seize attractive risk-adjusted returns.”
Christopher Collins, managing director of Corinthian, added: “We look forward to scaling up and expanding our unique underwriting product that has a proven history of providing an efficient path for investors seeking attractive reinsurance opportunities.
“We’re excited to have our history and experience in utilizing risk mitigation techniques to build a diverse portfolio for non-CAT reinsurance, to be validated and enhanced by Vesttoo’s impressive AI stochastic projection and innovative risk modeling. We are proud to be a part of VESCOR in leading the way for institutional investors to participate in this highly desirable investment sector.”
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