15 July 2021Actuarial & underwriting

Can-do attitude makes Guernsey the natural home of ILS: We Are Guernsey

Guernsey’s can-do attitude and flexible regulator make it a natural home for the insurance-linked securities (ILS) industry, according to speakers at a We Are Guernsey ILS Insights event.

Cedric Edmonds, founder of Replexus and Gus Majed, chief executive officer and founder of Paratus were guest speakers at the event, and explained why they chose Guernsey to launch new ILS products.

Replexus’s first transaction was a $3 million privately-placed issuance, sponsored by the Danish Red Cross. It was brought to market through a Guernsey-domiciled reinsurance structure, Dunant Re IC – an incorporated cell of Replexus ICC (Guernsey).

The bonds were settled using Replexus’ unique ILS blockchain. The catastrophe bond covers the risk of eruption of ten volcanoes across three continents and raised $3 million from specialist CAT bond investors. The capital will support humanitarian aid in the aftermath of an eruption.

Edmonds said its securities are liquid and electronically tradable and priced, fixing many of the problems related to collateralised reinsurance. “Replexus essentially takes a simple ICC to the next level within the ILS space,” he said. “It offers ILS funds and investors the same benefits of CAT bonds but without the costs and without the time to set them up.”

While Guernsey had never issued a comparable structure before, it was “willing to give it a go and they had a very can-do attitude,” he added.

Majed said Paratus wanted to create simple and trustworthy insurance products, which made Guernsey an obvious choice. “It’s a risk management product, it’s priced very aggressively, it’s backed by trustworthy, regulated brokers using a first-class regulator in a first-class jurisdiction,” he explained.

He also emphasised Guernsey’s geographical advantages. “Guernsey is a fantastic time zone that gives us the ability very early on to price cover for the Asian clients and then from midday onwards Europe and the US,” he said.