Winner: EMX Partners

(Re)insurer participation in SRT deals has historically been limited to unfunded and non-STS transactions. EMX Partners is SCI’s pick for Newcomer of the Year in this year’s CRT Awards for establishing a platform that combines (re)insurer risk appetite with third-party funding to create rated repacks of SRT notes.

Since its launch in June 2023, EMX closed its debut transaction in 3Q23 and a second transaction in 2Q24. The firm’s strategy is built on two principles. First, (re)insurers will generally have the lowest cost of capital to hold the portfolio credit risk in SRT deals and will also generally have the highest credit rating of investors that need funding for these deals.

The second principle is that to participate meaningfully in the SRT market, a simple and programmatic platform is required to combine (re)insurer risk appetite with the necessary funding. This should be an attractive proposition from an issuer bank’s perspective, both quantitatively and qualitatively, since insurers have a much longer investment horizon than a typical alternative asset manager.

What then is simple and programmatic about the EMX platform? EMX ceo Adam Moses says that it simplifies, so far as possible, the “ask” of (re)insurers; in other words, they are asked to only protect the returns on the SRT instrument. Additionally, by establishing a rated note issuance programme with standardised documentation which has been reviewed by most of the magic circle, the platform offers a simpler financing instrument to its funders.

The fact that the repack vehicle's notes are rated is where EMX’s key innovation lies. The rating element allows for a simple and capital-efficient way of lending into the structure, in return for an attractive margin for what is highly rated insurer risk. Furthermore, it opens the door for banks in European countries where a ratings floor is in existence to participate in STS deals.

“We view ourselves as building a complementary facility that allows (re)insurers to access risks, exposures and premium that they wouldn't otherwise be able to access,” Moses observes.

Looking ahead, he expects the expansion and diversification of the investor base to benefit the SRT market more globally. “It can be argued that the SRT market follows a buy-and-hold model and therefore lacks in liquidity. Until we get to a point where the investor base in the market is drawing on all sources of risk capital, I think it will remain very illiquid. Therefore, it is to the benefit of the market that the greater liquidity that the (re)insurers can bring to it is brought to bear,” he concludes.

Honourable Mention: LuminArx Capital Management
LuminArx, a US$2.4bn asset manager founded by Gideon Berger and Min Htoo, has been highly active in the SRT space. The firm has deployed over US$600m in SRT investments since launching its first fund in September 2023. Notably, the firm was among a select group of investors invited to participate in JPMorgan’s inaugural corporate SRT, Project Appia.

Following its initial SRT activity, LuminArx launched LuminArx SRT Fund Holdings, a dedicated SRT fund, which completed a closing this past August. The fund's flexible mandate and diverse team expertise allows for capabilities across asset classes (corporate debt, consumer loans and real estate debt) and structures (synthetic and cash).

For the full list of winners and honourable mentions in this year’s SCI Capital Relief Trades Awards, click here.