Peak Re in $12.32m mid-year Lion Rock Re sidecar issuance

Peak Reinsurance Company Limited (Peak Re), the Hong Kong headquartered, Fosun backed global reinsurer, has sponsored another collateralised reinsurance sidecar transaction, featuring a single $12.32 million tranche of notes that were issued by the reinsurers Lion Rock Re Ltd. special purpose vehicle.

It’s the third issuance from the Lion Rock Re fully collateralised reinsurance sidecar vehicle, as Peak Re continues to bring third-party capital ever more closely into its business model.

Lion Rock Re was the first Asian sidecar structure ever seen and with repeated issuances now looks set to play an ongoing and increasingly important role for Peak Re as its business continues to grow.

The reinsurer began its sidecar sponsorship in late 2018, with a $75 million issuance that ceded a slice of its global property catastrophe reinsurance book to high-quality global investors in time for the 2019 underwriting year.

Peak Re then renewed the sidecar in time for the 2020 underwriting year, with a $77 million Lion Rock Re II issuance that came to market at the beginning of this year.

Now, Peak Re has returned to the insurance-linked securities (ILS) market prior to the mid-year renewals with a fresh Lion Rock Re collateralised reinsurance sidecar issuance for the first time.

Lion Rock Re Ltd. has issued a single tranche of roughly $12.32 million Series 2020-1 C notes, with the notes due for maturity at April 1st 2021, we understand.

That suggests this could be a transaction that actually came to market around the April reinsurance renewal season, it’s not possible for us to be certain of the precise issuance date for the sidecar arrangement.

These notes will have been sold to qualified institutional investors and the proceeds used to collateralise the quota share retrocessional reinsurance agreement between Lion Rock Re Ltd. and Peak Re itself.

We assume this new Lion Rock Re sidecar issuance will feature global property catastrophe reinsurance risks, as the previous transactions have.

It’s good to see Peak Re expanding its activities in insurance-linked securities (ILS) again with this second sidecar issuance of 2020.

The reinsurer recently underscored its ambitions in the ILS market with its acquisition of Bermuda-based retro focused ILS fudn manager Lutece, which has now been completed and the ILS manager rebranded as Peak Capital.

At a time when many are struggling to secure the sidecar capacity they want, given investor’s are still facing volatility caused by the Covid-19 pandemic, Peak Re has done well to secure the necessary investor support to add to its collateralised sidecar for 2020 showing that investors find the opportunity to support its underwriting business an attractive proposition.

For details of many reinsurance sidecar investments and transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.