Neon raises third party capital to support first UK ILS vehicle

Specialist Lloyd's insurer Neon has unveiled the first insurance-linked securities (ILS) vehicle to be formed in the UK and completed a $72 million collateralised quota share reinsurance transaction that will underwrite a portion of its syndicate’s business.

NCM Re (UK PCC) has raised third party capital to support the transaction, which will provide collateralized reinsurance coverage to Neon Syndicate 2468’s property treaty reinsurance and direct and facultative portfolios.

NCM Re is the first UK-domiciled protected cell company, which utilises the recently approved ILS regulations. Neon said the use of the facility will enhance its global reinsurance offering to clients.

Martin Reith, chief executive of Neon Group, said: "Successfully raising third party capital shows trust and confidence in Neon’s management team, brand and underwriting proposition. NCM Re now provides Neon with the ability to raise third party capital to support collateralised ILS transactions where Neon can source bespoke opportunities for investors.

"Our investors will benefit from strong, data-driven risk selection and underwriting alongside a clear focus on delivering targeted returns, while we will look to increase our relevance and offering to clients. We look forward to continuing to develop our capital market presence as Neon builds on this landmark moment."

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