03 January 2018
Reporter: Ned Holmes

First ILS vehicle launched in the UK

Neon has launched the UK’s first insurance linked-securities (ILS) vehicle, NCM Re, and raised third-party capital to support the UK’s first ILS transaction.

The first UK-domiciled protected cell company (PCC) NCM Re, which launched on 1 January, utilises the UK’s new ILS regulations to provide Neon with the ability to further enhance its global reinsurance offering to clients.

The new ILS regulations, approved by a government cross-party committee in November last year, allow for insurance and reinsurance firms to transfer risk to the capital markets meaning businesses and consumers can manage their risk more effectively.

The government’s consultation on ILS also proposed to create a PCC regime for multi-arrangement insurance special purpose vehicles (ISPVs).

NCM Re will utilise a range of CAT modelling and pricing techniques to leverage Neon’s strong underwriting and risk selection skills to source business for third party investors.

Neon’s first ILS transaction is a $72 million collateralised quota share reinsurance transaction, which will underwrite a portion of Neon Syndicate 2468’s property treaty reinsurance and direct facultative portfolios.

Martin Reith, Neon Group chief executive, commented: “I am both excited and proud to see Neon making history - not only is it a testament to Neon’s commitment to doing things differently but it also underpins our attitude as a business—unafraid to lead the way and embrace change.”

He continued: “Our investors will benefit from strong, data-driven risk selection and underwriting alongside a clear focus on delivering targeted returns, while we will look to increase our relevance and offering to clients.”

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