Alternative Reinsurance and Investment platform, Vesttoo, has partnered with Corinthian Re to launch VESCOR, which will offer the world’s first non-catastrophe insurance investment-grade feeder fund.
The new strategic partnership has been designed to offer institutional investors rated notes securitising “dozens” of underlying property and casualty (P&C) reinsurance transactions.
The pair explained that to start, the first note issued will cover more than $250 million in gross written premiums (GWP) with a goal of covering $2 billion GWP in subsequently issued notes.
The VESCOR partnership is targeting its initial investment-grade rating for issued notes by one of the world’s leading rating agencies.
VESCOR will enable investors to assume the risk and returns of a group of insurance policies written by hand-selected, diversified re/insurers, with Vesttoo’s advanced AI undertaking risk modelling and performance management. Furthermore, Vesttoo will also be carrying the equity layer of these securities through its ILP fund.
Yaniv Bertele, Chief Executive Officer (CEO) and Co-Founder of Vesttoo, commented: “This is a first-of-its-kind partnership – offering investors significant investment-grade returns together with uncorrelated diversification.
“We are leveraging Corinthian’s vast experience and reputation in the reinsurance and alternative risk transfer markets and combining it with Vesttoo’s tech-enabled modeling and financial engineering. It’s a unique and innovative opportunity for investors to seize attractive risk-adjusted returns.”
Under the partnership, Corinthian assumes responsibility for ongoing identification, structuring and managing of the diversified underwriting portfolio, supported by Vesttoo’s AI-powered technology, modeling and financial engineering, with several banks leading the transaction placements.
The companies note that each of the transactions will feature an aggregate stop loss (ASL) on top of the quota share layer in order to maximize ratings and protect returns. This will be the first-ever investment instrument that includes both quota share and ASL layers.
Vesttoo states that its proprietary AI-based financial engineering will work closely with the rating agency to ensure that the level of collateralization and probability of exhaustion are within the tolerance. Each note will meet the specific rating requirements associated with insurance industry standards.
Christopher Collins, Managing Director of Corinthian, said: “We look forward to scaling up and expanding our unique underwriting product that has a proven history of providing an efficient path for investors seeking attractive reinsurance opportunities.
“We’re excited to have our history and experience in utilizing risk mitigation techniques to build a diverse portfolio for non-CAT reinsurance, to be validated and enhanced by Vesttoo’s impressive AI stochastic projection and innovative risk modeling. We are proud to be a part of VESCOR in leading the way for institutional investors to participate in this highly desirable investment sector.”
