Case Study: ILS/Collateralized - Life / Transformer Vehicle – USA

Case Study: Background

A life insurer was required to reduce its exposure to a catastrophic mortality event. A typical insurance product was not available, and therefore it had to offer a debt type product. This offering was not generating enough capacity to fully cover the risk.

Case Study: Approach

White Rock provided the client with a Swap Agreement that complies with all ISDA 2002 Master Agreement requirements (International Swap & Derivatives Association). This allowed White Rock to take on the same risk as the debt markets but with the added benefit of allowing cell 2 to issue a policy of insurance to cell 1 to assume the risk of loss under the Swap Agreement. With the help of Aon Benfield, White Rock cell 2 is then able to access the worldwide reinsurance markets to lay-off 100% of the risk.

Case Study: Results

Without White Rock, the client would not have had access to the necessary reinsurance capacity, and this placement would not have been possible. Further, the client has reduced their exposure to a concentration of counterparty exposure by spreading the risk amongst many reinsurance markets.