Credit Agricole Securities placed CAD$120 million of notes issued by Vecta I Ltd., which marks the first ABS backed by Canadian life insurance embedded value.
The 144A deal is sponsored by Aurigen Reinsurance and covers a closed block of policies reinsured by the firm between 2008 and 2010.
The offering has a single tranche rated 'BBB+ (sf)' by Standard and Poor’s. The notes have an expected maturity of 6.25 years and a coupon rate of 8.0%. Credit Agricole served as the structuring lead on the financing, and was joint book runner together with Swiss Re Capital Markets.
The principal repayment on the notes is linked to the emergence of future profits on the subject business comprising twelve life reinsurance treaties that were underwritten by Aurigen Reinsurance Co., an affiliate of Aurigen Reinsurance from six separate life-insurance firms.
Independent third-party risk analysis for the notes were done by Oliver Wyman.
“We are very excited to have completed the very first Canadian embedded value securitization”, said Alan Ryder, president and CEO of Aurigen Capital. “The Vecta transaction demonstrates Aurigen’s leadership, innovation and access to the capital markets. It greatly diversifies our existing capital structure and provides Aurigen with a substantial amount of additional capital to continue the development of its business.”
”We were delighted to advise Aurigen on this transaction which demonstrates our structuring and placement capabilities in this field,” said Vincent Fleury, global securitization head at Credit Agricole.