Pula, a Swiss headquartered specialist in parametric agriculture insurance for micro and mesa use-cases across Africa and parts of Asia, has established a collateralized insurer class of company in Bermuda, named Pula Reinsurance Ltd., Artemis has learned.
Pula Reinsurance Ltd. was registered by the Bermuda Monetary Authority (BMA) as a collateralized insurer in July.
Pula has a mission to reimagine agricultural insurance to protect smallholders worldwide, utilising technology and parametric triggers to construct products at the micro and mesa scale that can provide responsive risk transfer protection.
It’s main products include crop and livestock insurance covers, structured using parametric triggers and it has delivered insurance that benefits more than 5 million smallholder farmers across the regions it serves.
Pula’s area yield index insurance enables farmers to be resilient against climate events that could reduce yields, with a goal to deliver timely payouts. When crop yields fall below a benchmark index, due to drought, floods, pests, or other climate shocks, farmers that are affected receive automatic payouts.
Meanwhile, a hybrid livestock product blends index-based and indemnity-based approaches, covering drought on a parametric trigger basis, as well as providing indemnity coverage for livestock deaths and thefts.
Pula also works closely with the African Risk Capacity Limited (ARC Ltd), a commercial subsidiary of African Risk Capacity Group (ARC Group).
The collateralized insurer class of company registration provides a vehicle that can be used for multiple transactions and these are often used as market facing collateralized reinsurance vehicles, or by insurance-linked securities (ILS) fund managers as a vehicle to transact through as they source and underwrite risk.
They structure is a multi-transactional vehicles, that can underwrite collateralized reinsurance, retro and other forms of ILS arrangement.
The collateralized insurer class can also be utilised as a sidecar structure, allowing for multiple quota share cessions to be ceded to third-party investors or alternative capital sources as well.
As a result, while we don’t know the use-case the company is planning for the new entity, Pula could utilise the newly registered Pula Reinsurance Ltd. to reinsure its own programs, perhaps backed by certain alternative or third-party capital sources.
If the strategy is targeting use of third-party investor capital, Pula would be among the first to attempt to do so in the micro and mesa agricultural insurance space. This could bring the insurer access to efficient capital, enabling it to write more business and continue its expansion.
It shows the forward-thinking approach Pula is adopting and its openness to leveraging structures and techniques from the insurance-linked securities (ILS) market to bring in differentiated reinsurance capital sources to support its parametric underwriting.
