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Build America Mutual gets $150m of reinsurance with second Fidus Re ILS deal

23rd February 2021 - Author: Matt Sheehan

Specialist financial guarantee insurer Build America Mutual (BAM) has secured $150 million of fully collateralized reinsurance via a second issuance through its Bermuda special purpose insurer (SPI), Fidus Re.

Fidus Re was set up to issue and sell notes to investors, and was previously used by BAM to obtain $100 million of reinsurance in a 2018 transaction.

This earlier ILS arrangement still remains in force, so BAM effectively has a total of $250 million of financial guarantee reinsurance in place thanks to Fidus Re.

The company explained that the latest transaction would expand its claims-paying resources to more than $1.1 billion.

“The substantial growth in claims-paying resources is the result of the continued execution of our long-term capital plan, which allows BAM to build unparalleled financial strength both through organic growth and periodically accessing the capital markets,” said Seán W. McCarthy, Chief Executive Officer of BAM.

The new $150 million of 2021-1 notes issued by Fidus Re Ltd. will provide BAM with reinsurance against losses on a pre-defined portion of Build America Mutual Assurance Company’s financial guarantee insurance portfolio.

The Fidus Re 2021-1 ILS arrangement will cover 90% BAM’s claims on that portfolio, excess of $135 million, on an aggregate basis.

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