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Estera - An emerging leader in Bermuda's Insurance-Linked Securities (ILS) success story

Bermuda’s ILS industry experienced phenomenal expansion in the past decade by Sherman Taylor, Estera Associate Director

According to a 2016 survey commissioned by the Bermuda Business Development Authority (BDA) (available: here), ILS generated $734 million for Bermuda’s economy in 2015; whereas, in 2009, the amount generated from ILS was negligible. The BDA commissioned report states that, in 2015, 75% of all ILS were domiciled in Bermuda and 69% of all ILS were listed on the Bermuda Stock Exchange (BSX).

The role of Estera in this Bermuda success story is in itself a story worth telling. Since 2008, Estera has steadily built a sizeable bank of ILS intellectual capital, and today, our people expertly deploy that intellectual capital across a broad range of ILS related services spanning the lifecycle of ILS transactions from infancy to maturity and wind up.

Estera has a formidable track record of quality service to the Bermuda ILS industry, including the incorporation and corporate administration of special purpose insurance vehicles (SPI’s); the establishment and administration of the trusts that typically overlie SPI’s created for ILS transactions; the provision of specialist corporate governance and directorships for SPI’s using individuals recognized as “fit and proper” by the Bermuda regulators; the provision of comprehensive BSX listing services; and the provision of bespoke registrar and noteholder agent services designed to create flexible tradability for ILS during their life.

 

Over the years, Estera has been involved in several cutting edge developments in the Bermuda ILS industry, including the development of the now popular “Cat Bond Lite” structures that are typically below $50M, quicker to market and more cost effective to issue due to the requirement of less documentation and the innovative use of segregated account structures.

Bermuda’s ILS products continue to evolve with Estera on the forefront of much of that evolution. For instance, capital raised from ILS transactions no longer covers just pure catastrophe risk. In 2016, Estera was involved in a CHF 220M ILS transaction which was the first ILS transaction to cover “operational risk” exposure, and in 2014, Estera was involved in a Euro 50M ILS transaction that covered lottery jackpot shortfall risk exposure. In both these deals Estera worked closely with Appleby, one of the world’s largest providers of offshore legal services.

Estera’s bespoke registrar and noteholder services provide ILS platforms with a simplified solution for the transfer of beneficial ownership of the securities. Estera currently provides this service for several Bermuda based ILS platforms.

Another Estera innovation that has been popular in the Bermuda ILS industry is our unique ability to provide multiple services under one combined umbrella service agreement, creating synergistic cost savings for clients.

The Estera story in numbers

  • In 2014, Estera provided company formation, corporate secretarial services, trust services and BSX listing services for a $1.5B ILS transaction, which is the largest single ILS transaction recorded to date.
  • As of 10 August, 2016, Estera sponsored approximately 60% of the ILS and ILS programs currently listed on the BSX.
  • Between 1 January 2016 and 10 August 2016, Estera has been involved in $1,658M of ILS transactions, of which $619M was issued by 3 Bermuda SPI’s newly formed in 2016.
  • Estera successfully attracted several non-Bermuda based ILS to list on the BSX, currently 6 such ILS are listed on the BSX, underscoring the high regard for the jurisdiction and the BSX in the global ILS market.

Beyond the numbers

Bermuda is expected to continue to command the leadership position in the global ILS industry, and Estera, as a key service provider in the Bermuda ILS industry, has an integral role in this Bermuda success story.

For two days from November 9-10, Estera representatives will attend Convergence 2016, a Bermuda ILS conference being hosted in Bermuda for its fourth year. This two-day networking event attracts top global ILS industry participants, reaffirming the importance of the jurisdiction to the global ILS industry.

For more information about Estera’s ILS related services, please contact our Bermuda team.

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