SCI Awards: Credit Insurer of the Year

Category: Capital Relief Trades ABS

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Winner: Fidelis Insurance Holdings

Fidelis Insurance Holdings Ltd is a Bermuda-based global provider of specialty and bespoke insurance and reinsurance products, with underwriting entities in the UK, Ireland and Bermuda. For leading the insurance industry in participating in significant risk transfer transactions, the firm is SCI’s Credit Insurer of the Year.

“We strive to lead by example as a trusted execution partner and to deliver innovative, ground-breaking transactions. We are extremely grateful to the sponsors, brokers, our trusted counsel Parya Badie and Robert Simmons at A&O and our other partners who helped make this happen,” notes Mel Puskar, underwriter at Fidelis.

Insurers tend to be more comfortable with remote and longer-dated tranches of transactions, as well as risks emanating from diverse jurisdictions. More importantly, when the fundamentals are sound, the firm has appetite to move from SME and corporate debt into asset classes where its ability to assess risk and execute - such as mortgages, consumer credits, commercial real estate, and auto or term loans - is paramount.

Uniquely, Fidelis is not averse to first-loss and mezzanine risk. If a transaction makes sense holistically, and diversifies or balances its current risk exposure, the firm will participate in a meaningful way.

“The key for us as insurers is to be able to act quickly and minimise execution risk. The Fidelis team embraced lockdown as an opportunity to develop ways to reduce that risk,” observes Puskar.

She adds: “We have developed a bespoke up-front assessment process which allows us to quickly decide on a specific transaction. That makes the process more efficient and effective for everyone.”

With each transaction, Fidelis looks closely at the performance and behaviour of the underlying assets, then considers how they justify the structure. That gives the firm and its reinsurers comfort and allows it to be even more meaningful to banks by offering larger lines on a diverse set of portfolios.

Since Fidelis began to deploy this approach earlier this year, it has led three new SRT transactions and participated in many recent mortgage transactions. “We continue to believe that any potential opportunity is worth considering, and to further expand the diversity of credit type, product duration, and geography in our portfolio. For Fidelis, it is all about balance,” Puskar says.

The firm’s experienced underwriting team has operated through the economic cycle, having coalesced at Genworth Financial before moving to Fidelis. The team is supported by highly experienced legal, actuarial, reporting, claims, data and analytics, and reinsurance teams.

“We all believe the future of SRTs for the insurance industry is significant and are working diligently across multiple geographies and asset classes to help it grow. We are knowledgeable, efficient, and open-minded, and extremely proud to have earned SCI’s recognition with this award,” Puskar concludes.

Honourable mention: RenaissanceRe

RenaissanceRe is recognised as having one of the most capable teams in the significant risk transfer market and for executing a variety of different transactions. Indeed, over the last year, the firm has expanded its expertise and skill-set with the addition of two new hires. Similarly, it has increased its overall exposure limit from approximately US$500m to approximately US$650m deployed in SRT transactions.

RenaissanceRe’s appetite for risk exists across the entirety of the capital stack, with the firm having deployed limits on equity, junior mezzanine and senior mezzanine tranches across a number of different jurisdictions and asset classes during the awards period. At the same time, it continues to work with its partners and regulatory bodies to bring new forms of capacity and transactions to the market.

The firm completed the second SRT deal through its syndicated entity, RenaissanceRe Syndicate 1458, earlier this year. It assumed the pivotal role as lead reinsurer on this placement and the team’s experience allowed it to quickly navigate through negotiations, regulatory considerations and other potential implications, which saw the transaction completed efficiently.

Across the pond, RenaissanceRe is the market share leader in the US private mortgage insurance credit risk transfer reinsurance space, with a market share of approximately 25%. The firm is also a top three capacity provider for Fannie Mae and Freddie Mac CRT transactions, having deployed approximately US$1bn so far this year.