MultiStrat leverages Vesttoo tech for $55m casualty ILS deal

MultiStrat, the specialist underwriter and reinsurance investment facilitator, has completed another new casualty insurance-linked securities (ILS) transaction, with one layer of the arrangement completed using tech start-up Vesttoo’s data-driven risk transfer platform and its services in structuring, arranging and placing the transaction.

The $55 million stop-loss reinsurance transaction is one layer of a $150 million casualty linked security transaction recently completed by MultiStrat.

For Vesttoo, this is its first public transaction, having facilitated a few private transactions previously.

Using its technology platform, Vesttoo has helped MultiStrat enter into a $55 million custom-made risk transfer arrangement, structured as a contingent collateral swap under ISDA guidelines, with the transaction providing aggregate stop-loss reinsurance protection for the commercial trucking automobile liabilities of a property and casualty (P&C) insurer located in California.

An unnamed capital market investor has assumed the risk from this stop-loss commercial auto liability reinsurance deal, which could be one of the established insurance-linked securities (ILS) funds that underwrites risks from the casualty space.

The capital market investor has assumed the $55 million of risk through the collateralised swap arrangement, providing the insurer with risk transfer relief, while the investor benefits from a broadly uncorrelated asset.

The entire $150 million MultiStrat casualty ILS deal has been backed by capital markets funding, today’s announcement said.

Vesttoo created the transaction structure for this stop-loss arrangement using a portfolio-specific liability index that is calculated by advanced proprietary artificial intelligence AI-based risk models.

Vesttoo’s technology platform allows it to create customised, portfolio specific indemnity indices and risk models to support transactions, with the insurtech then acting as the structurer and helping cedents to access efficient reinsurance capital from institutional markets.

The company uses algorithms to optimise the risk transfer and constantly report on it, providing transparency into the hedge indemnity index along the way for the duration it is managed on the Vesttoo platform.

Vesttoo said that its risk models have been endorsed and audited by actuary and consultancy Milliman, which is an important seal of approval for the firm’s ability to offer this type of structured risk transfer arrangement more broadly.

Vesttoo provides end-to-end services for the arrangement of this casualty ILS transaction, including the construction of the risk model, ongoing index calculations, structuring and placement of the deal, as well as ongoing management through until maturity.

“This deal is the beginning of a strong strategic partnership between Vesttoo and MultiStrat. Our partner’s gross written premiums are set to rise in the years to come, and we are confident we will continue to build cutting-edge, low-cost risk transfer solutions with Multistrat in the future covering their expanding portfolio,” Yaniv Bertele, CEO of Vesttoo commented.

“This agreement marks an important milestone in MultiStrat’s Casualty ILS structures, allowing us to explore additional methods of efficiently limiting risk exposure through the capital markets,” James Robinson, CEO of MultiStrat Advisors further explained. “We are pleased to be working with Vesttoo, and are looking forward to doing business together.”

MultiStrat has previously completed a number of casualty ILS transactions, including most recently a $205 million transaction which remains its largest casualty ILS deal to-date.

Stonybrook Capital provided a range of advisory services related to the transaction.