Bedell Cristin advises on another global ILS first29 Aug 2017
The Guernsey office of Bedell Cristin has advised Artex Risk Services (Guernsey) Limited in connection with its role as settlement and collateral trustee to what is believed to be the first ever issue of ILS notes on a private blockchain. The ‘ILSBlockchain’, as it is being referred to, replaces the role of a traditional settlement system such as Euroclear.
Dom Re IC Limited, a Guernsey-domiciled ILS reinsurance transformer and incorporated cell of Solidum Re (Guernsey) ICC limited, issued $14,800,000 Principal-at-Risk, Participating Notes, due 2023, an asset-backed securitisation of a reinsurance contract. Solidum Re acts as the paying agent and common depository of the permanent global note. Solidum Re also acts as the blockchain permission grantor and blockchain sponsor.
The investors subscribed for the notes, paying into a Guernsey trust where Artex acts as trustee. On the issue date, the paying agent created cryptographically-certificated notes on the ILSBlockchain and then the investors were able to execute, peer-to-peer with the paying agent, delivery-vs-payment transactions on the ILSBlockchain to purchase the notes.
Investors hold their notes, cryptographically confirmed, on the ILSBlockchain. Secondary market traders wishing to purchase notes can do so by becoming participants on the ILSBlockchain and can then execute direct peer-to-peer delivery-vs-payment transactions to buy or sell notes on the ILSBlockchain. Broker-dealers can also become participants on the ILSBlockchain in order to intermediate trades between the other participants.
Richard Sharp, partner and head of insurance at Bedell Cristin, said "We were pleased to be able to advise on such a revolutionary transaction. Our in-depth experience of the ILS sector and the adoption of practical applications of blockchain technology meant we were well placed to guide Artex through the issues that arose when creating such an innovative structure."
Mark Helyar, Non-Executive Director of Solidum Re and Of Counsel, Bedell Cristin, said: “I am delighted that Solidum Re ICC has concluded this latest transaction. It is not an exaggeration to describe the new Dom Re IC structure as a ground breaking, global first, not only for the ILS sector but for dematerialisation of listed securities generally. Guernsey is once again the jurisdiction of choice for innovation in the ILS sector and I anticipate this model will be widely adopted”.