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CatX, a digital catastrophe and parametric risk exchange start-up, has announced that James Robinson, a Bermuda-based technology expert who previously worked in data science at re/insurer Hamilton, has been appointed to the CatX Bermuda board.

Robinson has joined the CatX Bermuda Board of Directors and the company said this further signifies its “commitment to Bermuda as a strategic hub for its operations.”

“The company recognizes Bermuda’s robust regulatory environment, innovative insurance ecosystem, and concentration of industry expertise as key advantages in supporting its global growth ambitions,” CatX explained.

James Robinson has more than two decades of experience in insurance, reinsurance, finance, and technology.

He founded Bermuda-based insurance software company Cactus Ltd., prior to which he held key positions at insurance and reinsurance group Hamilton, including as a software developer and latterly as a data scientist.

At Hamilton, Robinson worked on the design and development of cutting-edge insurance software solutions.

In the past he has also worked in software and quantitative development roles at Barclays Wealth and Capital.

CatX said his appointment will further develop its technological propositions, in particular Robinson’s expertise in developing world-class, scalable insurance and financial platforms.

The company also said it wants to expand its parametric insurance offerings, something that bringing onboard more technical and domain knowledge will no doubt assist with.

James Robinson commented on his appointment to the CatX Bermuda Board, “I am thrilled to join the Bermuda Board of CatX and support visionary founders like Lucas and Ben. Their substantial progress in automating parametric and ILS risk placement is setting a new standard in the industry. It’s an exciting time to be part of such an innovative endeavour and a huge endorsement of Bermuda’s regulatory environment for YC and Lloyd’s Lab alumni to expand their operations here.”

“We are delighted to welcome James Robinson to our Bermuda Board,” said Benedict Altier, CEO of CatX. “Technology is at the heart of our proposition to better connect new institutional investors with opportunities in insurance, reinsurance and retrocession.

“The challenge of expanding capital deployment into insurance opportunities requires new infrastructure to structure insurance data, offer understandable and accessible risk modelling and ensure confidence in collateral.”

Lucas Schneider, CTO of CatX, added, “James has been invaluable for CatX from the very beginning. His introductions to key industry players and insightful advice have been instrumental in shaping our strategic direction. We are excited to have him formally join our Bermuda Board of Directors and I am excited to work closely with him to establish ourselves as a key market for parametric and ILW opportunities by offering more competitive pricing and enhanced efficiency.”

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Hudson Structured Capital Management Ltd. (HSCM), the reinsurance, insurtech, insurance-linked securities (ILS) and transportation focused investment manager, has hired experienced alternative investment and capital markets executive Katherine Park as its new Head of Capital Formation and Investor Relations.

Park joined Hudson Structured Capital Management (HSCM) on June 3rd, the company said and brings a good deal of experience in capital markets and investor relations, with roles at asset managers and investment banks during her career.

She has more than 20 years of experience in debt and equity capital markets positions, working with alternative investment managers and public and private companies, ranging from early-stage to complex global institutions.

Most recently, Park has been working as Head of Business Development at a number of early-stage investment focused firms, including alternative asset manager Grafine Partners, fintech and artificial intelligence company Pagaya, global specialty finance company TriplePoint Capital, and as an advisor at multi-stage investment firm Andra.

Before that, Park spent 15 years working at Goldman Sachs, with a focus on alternative capital solutions and private capital raising, while also launching and leading its U.S. fund and private capital raising businesses for the investment banking and securities division.

“We are thrilled to welcome Kathy to the HSCM family,” Michael Millette, Co-Founder and CEO of HSCM commented.

“Her proven track record of leadership and her deep understanding of capital markets will be invaluable as we continue to drive growth and deliver value to our investors.”

HSCM said that Park’s appointment reinforces its commitment to excellence and innovation in the alternative investment space.

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Broking group Gallagher has filed a motion to dismiss the Vesttoo transaction related lawsuit brought against its reinsurance arm Gallagher Re by Porch Group, the owner of insurer Homeowners of America Insurance Company (HOA), saying that “the claim falls well short of the plausibility threshold.”

Back in May we reported that Porch Group had launched a lawsuit targeting broker Gallagher Re, claiming it “grossly mismanaged” the administration of the reinsurance related to a reinsurance transaction that was impacted by the Vesttoo reinsurance letter of credit (LOC) collateral fraud.

Porch had already reached a number of settlements related to the Vesttoo fraud, as it had been one of the more affected cedents.

That fraud scheme had seen the use of reinsurance collateral promises from the insurtech, backed by fraudulent letters of credit (LOC) that turned out to have been forged, lacking substance and had no real backing from capital providers.

Porch turned to the reinsurance broker behind one of its deals that involved Vesttoo, as it continued to seek financial compensation for the damages incurred due to the fraud.

Gallagher has now responded and urged the Texas court, where the lawsuit was filed, to dismiss the petition filed by Porch “in its entirety and with prejudice.”

Gallagher explains, in its motion to dismiss the case, that the defendants named in Porch’s lawsuit, parent AJG and Gallagher Re, “were not the fraudsters.”

“The fraud scheme was executed and enabled by a combination of non-parties to this suit: Vesttoo Ltd. (“Vesttoo”), Aon plc (“Aon”) and its subsidiary, White Rock Insurance (SAC) Ltd. (“White Rock”), and China Construction Bank. As it should, Porch has sought recoveries from these parties,” Gallagher stated.

Remember, Porch has already agreed a $30 million strategic arrangement with Aon, that included releasing all claims related to the Vesttoo fraud that it had against the broker, and it filed a separate and ongoing lawsuit against China Construction Bank.

The broking group’s motion continues to state, “But now Porch has filed this one-count breach of contract action against Gallagher Re, who merely acted as the broker for Porch’s subsidiary, Homeowners of America Insurance Company (“HOA”), in the reinsurance deal that ultimately went south. And, in a transparent attempt to avoid federal jurisdiction, Porch has improperly joined Gallagher Re’s parent company, AJG, despite AJG not being a party to the contract at issue. This action should be dismissed for several reasons.”

The motion states that a breach of contract claim levelled against AJG “must be dismissed because AJG has been improperly joined,” and that AJG was not party to the reinsurance contract in question, so was wrongfully named in the suit.

Secondly, the motion from Gallagher also claims that Porch has failed to state a claim against Gallagher Re, saying the claim “falls well short of the plausibility threshold” and that contract language shows that “Porch explicitly agreed that Gallagher Re was not obligated to perform the very tasks that Porch now alleges Gallagher Re was contractually obligated to perform.”

Gallagher says that Porch’s breach of contract claim is implausible and that contract language in documents governing the reinsurance agreement backs this up.

Here, the motion is referring to Porch’s claim that Gallagher Re was obliged to seek evidence that China Construction Bank, the bank named on the fraudulent letter of credit, had agreed to assume the risk related to the funding of the reinsurance agreement.

Gallagher states that its obligations were only to retain documentation related to the funding of the reinsurance agreement, not to seek evidence or confirmation of the funding that was supposed to be sitting behind it.

The motion also states that Porch has failed to joinder all parties to the lawsuit, saying, “Vesttoo and China Construction Bank are both required parties to this suit, but Vesttoo cannot feasibly be joined, and this Court should not in equity and good conscience proceed in Vesttoo’s absence under Rule 19(b). The Petition should therefore be dismissed pursuant to Rule 12(b)(7).”

As a reminder, Porch Group has already filed a law suit in New York against China Construction Bank Corporation.

Gallagher is also stating that without the joining of these other parties to the lawsuit, Porch could feasibly “double” the recoveries the plaintiff receives, if its legal actions were successful.

In such a significant fraud case, involving multiple parties and now with multiple lawsuits looking for recovery across them, the courts are going to have a challenging time ensuring accurate recoveries are awarded, where appropriate.

But parties will seek damages from all avenues, especially as the bankruptcy of Vesttoo did not result in sufficient liquidity to make anyone involved whole for their losses related to the insurtech’s fraud.

As we’ve said in our reporting before, it remains to be seen how successful these legal actions are, when all parties in the reinsurance market value chain that touched the Vesttoo transactions appear to have been equally-duped by the fraud that occurred.

With legal action ongoing the costs are also mounting for all parties involved and still there is no sign of any criminal proceedings, that many involved and observing believe are now long overdue in the Vesttoo saga.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

Gallagher urges court to dismiss Porch lawsuit over Vesttoo reinsurance transaction was published by: www.Artemis.bm
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Cayman headquartered reinsurance company Oxbridge Re has reported that the firm’s first series of tokenized reinsurance sidecar securities have now realised a 49% return for the investors backing them, surpassing both initial and updated expectations.

Oxbridge Re launched its Web3 startup SurancePlus in 2022, raising $2.4 million through a sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re.

That $2.4 million of capital was put to work in support of collateralized reinsurance contracts underwritten via the reinsurer’s sidecar structure, Oxbridge Re NS.

The securities represent fractionalized interests in reinsurance contracts written by the reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota share arrangements with its parent.

As a result, the investors benefit from a return through the performance of the underlying reinsurance contracts that the sidecar held for the underwriting year, which ends at the mid-point of 2024.

Oxbridge Re had been anticipating that investors in the first series of tokenized reinsurance securities would receive a roughly 42% return for the first treaty year.

A few months later, Oxbridge Re CEO Jay Madhu explained that he anticipated a higher return for the sidecar securities investors, saying that it could be 45% for the latest treaty year.

Now, the company has reported today that SurancePlus earned a 49.11% return on its tokenized reinsurance security, DeltaCat Re far exceeding the initial projection of 42%.

Jay Madhu, President and CEO of Oxbridge Re, commented, “Last year, SurancePlus enhanced Oxbridge Re’s special purpose vehicle, Oxbridge Re NS, by integrating digital innovations and insights by offering an RWA tokenized security, thus making reinsurance more accessible as an alternative investment through the Avalanche blockchain. We are pleased with the impressive returns for DeltaCat Re token investors.

“Looking ahead, we are excited about the long-term prospects of our business as we approach the close of our capital raise for the 2024/25 EpsilonCat Re Token.”

Oxbridge Re began that process of raising up to a $10 million target for the EpsilonCat Re tokenized reinsurance securities that will be issued by its subsidiary SurancePlus Inc. and provide investors a way to participate in the 2024/25 underwriting treaty year of the Oxbridge Re NS sidecar structure.

Back in 2019, Oxbridge Re’s sidecar returned 36% to its investors in a catastrophe loss free year.

The 49% earned in the most recent treaty year is therefore both impressive and a reflection of the hard reinsurance market and much improved terms now available in the marketplace.

As we reported yesterday, Oxbridge Re has announced that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

So the future is not yet clear for Oxbridge Re, or its strategy to leverage digital asset architecture to facilitate fractionalised investments in its reinsurance sidecar vehicle, but the stellar returns generated for investors should help the company attract attention.

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Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has announced today that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

Oxbridge Re launched what it calls its Web3 startup SurancePlus back in 2022, since when it has been issuing tokenized reinsurance securities, that effectively give investors a way to access the returns of its catastrophe focused reinsurance business.

Previously, Oxbridge Re had been operating a typical collateralized reinsurance sidecar, alongside its own collateralized balance-sheet.

But the SurancePlus strategy sought to take advantage of digital securities technology, to provide an alternative access point for investors, utilising blockchain type infrastructure.

When we last reported on the company, Jay Madhu, the Chairman and Chief Executive Officer of Cayman headquartered reinsurer Oxbridge Re, had said that the firm’s first series of tokenized reinsurance sidecar securities were set to deliver investors a 45% return, surpassing the initial expectation of 42%.

The securities represent fractionalized interests in reinsurance contracts written by Oxbridge Re’s reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota shares with its parent.

So the investors access a return through the performance of the underlying reinsurance contracts that sat in the sidecar for the current underwriting year, which runs to the mid-point of 2024.

Today, Oxbridge Re said that its board of directors has “initiated a process to evaluate strategic alternatives to maximize shareholder value.”

Explaining that, “As part of the evaluation process, the Company will consider a full range of strategic alternatives for the Company, and/or its Web-3 division subsidiary SurancePlus Holdings Ltd, including a sale, spinout, merger, divestiture, recapitalization, and other strategic transactions, or continuing to operate as a public, independent company.”

CEO Madhu further said, “To reinforce our strategic vision, we are committed to exploring opportunities that will deliver value to our stakeholders and ensure continued success in our evolving industries.”

The company further said that it cannot guarantee that the evaluation of strategic options will result in any deal or transaction.

Oxbridge Re has never really scaled into a particularly meaningful reinsurance player. But its tokenized reinsurance securities are the first and only such tech-focused initiative to come out of the traditional reinsurance market and so could prove attractive to players that consider this a viable approach to partnering with investors and bringing alternative capital into an underwriting business.

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Descartes Underwriting, the parametric insurance and data-driven risk transfer specialist managing general agency (MGA), has hired former OTT Risk employee Matthew James as its new Commercial Director, UK & Ireland.

James joins Descartes after ten years at broker WTW and then a stint as Head of Business Development in London for the now defunct parametric MGA OTT Risk.

At Descartes, he will be tasked with leading business development activities in London for the firms parametric insurance solutions.

In his time at broker WTW, James worked on structuring novel parametric solutions designed to manage the weather-risk exposures of clients across a range of industry sectors.

He then joined parametric MGA startup OTT Risk, again in London, but that company shuttered its operations in the first-quarter of this year.

At Descartes, James is taking over from Paul Jones, who is leaving the company after a near three year stint, to pursue other opportunities.

“We’re really excited to have attracted someone of Matthew’s experience and ingenuity as the new head of our London office,” explained Descartes co-founder and Chief Executive Tanguy Touffut. “His experience working with clients as a broker, assessing their climate and insurance challenges then crafting parametric solutions, will bring a new perspective to our work. Our restated strategy remains to deliver strong growth in high-potential markets, and Descartes will continue to deliver, in London and around the world.

“I’d like to thank Paul for his contribution to our development over the years. His work, particularly in educating new brokers to the benefits of parametric and developing and distributing coverages for peak peril exposures, has been invaluable. I wish him every good fortune.”

“I am super-pleased to be joining Descartes,” Matthew James added. “They are renowned as a leader in parametric insurance and I’ve followed their growth closely since their birth in 2018. The team of data scientists in Paris and London boasts some serious brains. Their depth of expertise and understanding of climate change’s impact on business is hard to beat. I look forward to working with this team at the cutting edge of parametric insurance, and alongside Ola Jacob and the rest of Descartes’ London team.”

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When global reinsurance firm Swiss Re announced its first-quarter results last week, the company also notified shareholders and markets that it intends to withdraw from its iptiQ business, a tech-focused initiative that effectively brought the giant balance-sheet of the reinsurer much closer to the risk.

Having a background (in a previous life) in technology, e-commerce and finding ways to match capital with sources of demand in the most direct and efficient ways possible, I was always a fan of the iptiQ strategy.

I’ve described it before as Swiss Re “finding innovative ways to source risk as directly as possible” and while Swiss Re always called its iptiQ digital platform a B2B2C strategy, I’ve always viewed it as an innovative way to “white-label the Swiss Re balance-sheet for third-parties that can originate risk.”

iptiQ allowed Swiss Re to bring its risk capital and underwriting rules much further forward in the markets value-chain, though the use of technology, API’s, embedded strategies and partnerships, really all very typical e-commerce techniques, but less typical in wholesale capital financing like reinsurance.

By white-labeling the Swiss Re balance-sheet, business rules, underwriting and pricing, then making them available to partners through the iptiQ tech platform, the reinsurance firm was also bringing the end-client much closer as well.

Just a few years ago, Christian Mumenthaler, the outgoing CEO of the company, had said that offering things outside of pure capital transfer, such as iptiQ, was a core strategy, saying that these initiatives were “a differentiator, compared to just this traditional, more commoditised reinsurance.”

Back then, iptiQ was seen as one of the crown jewels for an expansive Swiss Re, a way to do more business directly, sourcing risk premiums more directly from the end-customer, shortening the market chain and embedding the company values and capital resources within partners business models.

Mumenthaler himself had said that capital was not the main value proposition in reinsurance, it was just an entry ticket to the fray, while expertise, service and innovation would drive success.

As the iptiQ business was growing and Swiss Re’s focus on alternative capital and insurance-linked securities (ILS) investors had been rekindled with the expansion of its Alternative Capital Partners (ACP) unit and launch of dedicated ILS funds, we had described the iptiQ strategy as having:

“…the potential to become another source of risk for Swiss Re and its third-party capital partners, expanding the reinsurers reach and ultimately creating a bigger mouse-trap for risk.”

Fast-forward to 2024 and iptiQ is no longer a core focus, in fact it’s seen as an initiative to withdraw from by Swiss Re.

It’s important to note here, that Swiss Re is set to maximise as much value as it can from iptiQ, as it withdraws and potentially sells it as a whole or in parts, which could be quite lucrative given the entire venture was created and built in-house from scratch and you could see any buyer maintaining a relationship with the reinsurer and perhaps even some level of access to balance-sheet capacity.

Now, with CEO Christian Mumenthaler leaving Swiss Re after 25 years and Andreas Berger stepping in to that position from July 1st, Mumenthaler made a last appearance at the quarterly analyst call recently and explained his view on the planned withdrawal from iptiQ.

Which gave some insights into how Mumenthaler and Swiss Re thinks about the reinsurance market today, versus how the landscape looked just a few years ago.

Mumenthaler explained the backdrop to the creation of iptiQ during the analyst call, “There was a time where there was a significant anxiety around reinsurance and low-interest rates and capital flowing in. Remember, in about 2017 after the big nat cats in the US, for example, pricing really didn’t react.

“So, it was really a question of, how is this whole value-chain going to develop and where will we play as Swiss Re in the future?

“That’s the time, I would argue you need to start to build strategic optionality and think about different places in the value-chain and have options in also the ACP (Alternative Capital Partners) space.”

Next, Mumenthaler explained why the context has changed today and why this makes iptiQ less attractive to retain, for the global reinsurance firm.

“What has changed is really, in the last one and a half years or so, a very strong interest rate increase ending this huge phase and stopping the capital flow, which was relentless coming from outside into the reinsurance business,” Mumenthaler said.

Continuing, “So, that means the coop is much more secure and the other thing that has changed is that, on the insurtech side, while things are developing, they are developing more slowly and there’s no real disruption to be seen.”

Going on to say, “So the question is not whether it can fundamentally be a good business or not. It is a question of, does it fit as part of our long-term future, does it fit with us?

“There I have to say, I think in another context, the sense was yes, this is a strategic optionality, we need.

“But, in the current context, I think the honest answer is, it’s very hard to see a future where we will need this, that’s more honest to say.”

Here, it’s worth pointing out, that Swiss Re’s reinsurance business has been expanding through the recent hardening of the market and now with stability largely the current market dynamic, profits look set to be attractive, loss activity and legacy effects allowing. So it’s perhaps not surprising the focus has changed, alongside this change in context and market dynamic.

Mumenthaler said that, at the time of iptiQ’s planning and launch, “We felt there was a very strong case for it.”

But given the changed dynamic in reinsurance in 2024, “Let’s be open that this is not a fit with us for our long-term strategic future. I can’t foresee a huge impact on us, so this is going to be managed for value.”

It’s really interesting to hear Mumenthaler’s viewpoints on this, as the changed dynamics he refers to are a lot to do with what drove the significant softening of reinsurance rates, especially in property catastrophe risks and also the growth of the insurance-linked securities (ILS) market.

But, perhaps it was not the growth of ILS capital that disrupted things and drove the reinsurer to explore initiatives such as iptiQ, rather it might have been the fact that all the major reinsurers of the world lowered their pricing, relaxed their terms and became far more competitive during that soft market phase, almost as a response to the rapid expansion of ILS and alternative capital.

Today, the ILS and alternative market is at least the same size, or bigger, and far more embedded in reinsurance than it had been back in 2017 and prior.

The main difference being, that ILS capital is now accepted as a stable, complementary, necessary capital extension and source of protection for the traditional industry. Not something to be afraid of in case it rapidly ate your lunch, so to speak.

The overall insurance and reinsurance industry has matured and learned to harness the appetite of institutional investors, to its benefit and we now stand with a much more robust capital framework for the industry today, than we did a decade ago thanks to ILS products and investors.

Will the dynamics ever return that could drive reinsurers to again seek to be innovative in bringing their capital right to the forefront of the market chain?

Quite possibly, in fact we do see this in many discrete areas, but for now we appear to be in a more balanced status-quo, between traditional and alternative, perhaps helped by the new balance in risk bearing between primary and reinsurer.

It won’t last forever, but finding a comfortable middle-ground where both sides flourish has been beneficial for profits and returns all round, meaning there are motivations to sustain the way traditional and alternative interact with less direct competition today.

All that said, it’s surely just a matter of time before some innovative company (maybe even Swiss Re) finds new ways to connect its balance-sheet capacity to burgeoning sources of risk far more directly (API’s to connect capital, algorithmic business rules to define the underwriting, anyone?).

The (reinsurance capital) context has changed: Mumenthaler, Swiss Re was published by: www.Artemis.bm
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CatX, a digital catastrophe and parametric risk exchange start-up, has launched a new artificial intelligence (AI) tool named Catamaran, which can create and analyse a reinsurance submission then provide rapid feedback on investor interest and pricing.

The stand-alone artificial intelligence-powered tool can be used by brokers and underwriters to prepare high-quality structured reinsurance submissions.

With the Catamaran AI, this can be achieved by uploading any existing documentation or modelling files, while the AI model can extract any data point to populate a digital submission that can be used to present risks to investors or reinsurers, CatX explained.

Most interesting though, is the fact Catamaran can then provide feedback on whether there is interest from the institutional investors using CatX’s platform in offering capacity to support the reinsurance deal.

In addition, the Catamaran AI can also provide indicative pricing, to support investor and reinsurer decision-making.

The Catamaran reinsurance submission tool can also provide an export of the information in a manner compatible with standard insurance file formats, such as MRCV3 or ACORD, CatX said.

CatX hopes that, with the use of Catamaran’s AI technology, the structured submissions can “help to make insurance opportunities appealing to a wider range of investors.”

Thanks to recently announced partnerships, CatX’s platform also allows users to run third-party risk models from providers such as RMS and Cybercube, so that risks can be presented in a more investor-friendly format.

Going into more detail CatX explained, “Investors and reinsurers will be able to use Catamaran to analyze incoming submissions and manage transaction pipelines. Investors can run analyses to extract key information about underlying portfolio and modelling data. They can also compare versions to identify similarities, differences, or changes in conditions and wordings. On the CatX platform, opportunities are matched with funds that define their investment preferences across minimum rates, cedents, underwriters, regions, and perils.”

“We have seen first-hand how effective structured digital submissions can be in securing better-priced capacity from institutional investors. They will help to grow the alternative capital market through enhanced transparency which supports decision-making and helps to attract a broader investor base,” explained Benedict Altier, CEO of CatX. “Artificial intelligence will play a key role in helping the industry improve standardization, while still requiring underwriters and brokers to review key details to ensure accuracy.”

“With Catamaran, we are not only improving the quality of submissions but also paving the way for more advanced underwriting processes,” added Lucas Schneider, CTO of CatX. “Our machine-readable submissions are designed to facilitate algorithmic underwriting, ensuring that opportunities are accurately matched with the right markets.”

“Catamaran is the easiest way to bring submissions to new capital sources. The tool can automatically build a comprehensive deal page containing structured transaction information, contracts and modelling files,” Felix Terpstra, Lead Engineer of CatX also said. “Automating the basics allows underwriters and brokers to focus on getting the details right, therefore producing higher quality submissions with quicker turnaround times.”

It’s a very interesting addition to the CatX platform offering, but perhaps a first step away, or slight detour, from the initial goal of becoming a risk placement and exchange tool, to connect risk to the capital markets.

A number of attempts to create true risk exchange functionality for the reinsurance market have been stymied by brokers in the past.

So, positioning to add value that can support the broker community’s operations is a shrewd move, as that is the best way to gain traction in reinsurance, by supporting the broker processes and making their lives easier, while allowing them to continue owning their client relationships.

It’s a particularly delicate balancing act, to innovate in the reinsurance transaction placement and syndication space, while not stepping on broker toes.

CatX launches Catamaran AI, provides feedback on investor interest & pricing was published by: www.Artemis.bm
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