Home Insurance One of BAM’s Fidus Re financial guarantee ILS has ratings upgrade

One of BAM’s Fidus Re financial guarantee ILS has ratings upgrade


One of the insurance-linked securities (ILS) sponsored by financial guarantee and municipal bond specialist Build America Mutual Assurance Company has had its ratings upgraded, while another has been affirmed, as the chance of losses being faced has decreased on quicker than scheduled amortisation of the underlying business.

Build America Mutual has accessed the capital markets for a securitization of financial guarantee insurance risks three times now, with financial guarantee ILS transactions issued in 2018, 2021 and 2022.

With these securitized arrangements, the insurer has put the capital markets at the heart of its reinsurance arrangements and utilised catastrophe bond technology to achieve that.

A bit like the mortgage ILS deals we cover, the underlying book of business amortises down over-time with the Fidus Re series of transactions, meaning the potential risk associated with an investment in the ILS notes issued declines over-time.

Now, Kroll Bond Rating Agency has upgraded its rating on the Fidus Re Ltd. (Series 2018-1) issuance to AA+ and at the same time affirmed its AA rating on the Fidus Re Ltd. (Series 2021-1) transaction.

Each were issued and sold to investors to fund collateralized excess-of-loss…

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