Guernsey insurer issues Blockchain note

Posted: 07/08/2017

Dom Re IC, a Guernsey-domiciled ILS reinsurance transformer and incorporated cell of Solidum Re (Guernsey) ICC, has with its most recent placement issued one of the first notes to have been digitised on a private blockchain.
 
Referred to as the ILSBlockchain, the mechanism has replaced the role of a traditional settlement system such as Euroclear or DTC for this note issue.
 
Dom Re IC issued $14,800,000 Principal-at-Risk, Participating Notes, due 2023, an asset-backed securitisation of a reinsurance contract, to a total of six investors. 

Solidum Re acts as the paying agent and common depository of the permanent global note. It also acts as the blockchain permission grantor and blockchain sponsor. The investors subscribed for the notes, paying into a Guernsey trust where Artex Risk Services (Guernsey) 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 newly created notes.
 
Investors now 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 and/or sell notes seamlessly.

Equally, broker-dealers can become participants on the ILSBlockchain in order to intermediate trades between the other participants.
 
Cedric Edmonds, Director of Solidum Re, who was key in the design and implementation of the ILSBlockchain and surrounding structural mechanics, said Dom Re required an alternative to Euroclear. It was becoming increasingly difficult to access Euroclear efficiently for smaller private placement note issues.

He added: “Without the support and flexibility of the service providers in Guernsey, most notably Artex, which picked up the baton at a late stage from another service provider, completing this would not have been possible.”


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