Bermuda-based firm, TEAM International (Holdings), Ltd., has announced the development of a new investment structure intended for application in the insurance and reinsurance industries.
The Guaranteed Adjustable-Rate Note (GARNet) has been designed specifically for long-term, high-grade investors, with re/insurers thought as particularly likely to benefit from their capital efficiency when held on balance-sheet as an investment asset.
TEAM explained that its GARNet product is a guaranteed investment contract (GIC) and has features that provide for expected high NRSRO and NAIC ratings, which can result in low capital charges for those holding the notes.
The notes are structured to allow an investor the ability to target above market returns, via implementation of a proprietary investment strategy composed of low-risk assets such as US Treasury zeros, or other equivalent sovereign debt assets.
These provide for principal and minimum interest payments, while a portfolio of higher yielding investments linked to the note structure can augment returns.
TEAM believes that its new investment product can help to increase the credit quality of the GARNet investor’s portfolio.
“The GARNet leverages TEAM’s reinsurance, bond insurance and capital market executives who have a long association with Bermuda and New York,” said TEAM Chairman Andrew A. Alberti.
“This novel capital solution,” CEO Dennis A. Szal added, “is grounded in the many benefits of the Bermuda SAC Act and the New York GIC legislation that has been in effect since the early 60’s, with its simple transparency now a staple of insurance company products.”
TEAM believes that the proceeds of a GARNet can protect the GARNet holders, while assisting third party insurers with hard-to-place insurance, ILS tranches or other strategic objectives.
Strategic objectives may include GARNet series tailored to: Side-Cars, First Layer Medical Malpractice or Utility Transmission and Distribution lines.
TEAM also said that it plans to execute on a reinsurance business model, including reinsurance, bond insurance and asset management, through its novel GARNet in the form of a traditional Guaranteed Investment Contract.