1 April 2020ILS

Vario Partners and Hyperion X launch ILS product

Vario Partners, part of the Bermuda-based Vario Group, is partnering with Hyperion X, the technology and analytics division of Hyperion Insurance Group, to provide collateralised, whole account stop-loss reinsurance cover.

Hyperion X provides the analytics, while Vario provides the multi-year stop-loss reinsurance to create scalable, investor-backed capacity.

In a statement, the companies said the move would help clients to navigate the current period of uncertainty created by COVID-19, which is leading to fears of economic recession and increased credit risk. These concerns are increasing demand for less exposed, non-cyclical products, the companies said.

“Whole account risk transfer insurance linked securities (ILS) are an attractive contingent capital alternative in this environment,” they added.

Vario said its risk transfer mechanism improves regulatory solvency ratios and brings greater certainty to re/insurers’ technical results, reducing the cost of capital and enhancing franchise value.

Bryan Joseph, founding partner at Vario Partners, said: “Including a layer of contingent capital in a reinsurance structure provides companies with enhanced shareholder returns and protection in those years when an accumulation of events and reserve development can impair shareholder value.”

Elliot Richardson, chairman of Hyperion X’s sister company RKH Reinsurance Brokers, said the additional capacity comes at a time when reinsurance and retrocession cover, particularly whole account stop-loss, is at or near all-time lows.

David Flandro, managing director of Hyperion X Analytics added: “This structure uniquely benefits earnings volatility and balance sheet strength at a time when retrocession rates-online have increased, and carrier financing costs are rising sharply. We are bringing this to market now to give re/insurers access to a new source of stable, competitive capacity during this volatile period which enhances balance sheet strength for future profitable growth.”