Nayms Introduces the World’s First Crypto-Denominated Industry Loss Warranty (ILW)

July 9, 2023
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Key Takeaways:

  • Nayms has issued the world’s first crypto-denominated industry loss warranty (ILW) through the second segregated account within its marketplace.
  • The ILW provides retrocessional reinsurance protection to property reinsurers, specifically covering US named windstorm events.
  • By utilizing USD Coin (USDC) as collateral within an independently audited Ethereum smart contract, Nayms ensures enhanced transparency and efficiency in the collateralization process.
  • The ILW was purchased by Prospero Re, a Bermuda insurer owned by Resolute Global Partners, and placed through the guidance of Guy Carpenter, acting as the sole placing broker.

Introduction

Nayms SAC Ltd., the leading crypto-native insurance marketplace, has achieved a significant milestone by issuing the world’s first crypto-denominated industry loss warranty (ILW). The ILW, facilitated through the second segregated account or ‘cell’ within Nayms’ marketplace, offers retrocessional reinsurance protection specifically for property reinsurers.

Innovative Features of the Crypto-Denominated ILW

In this groundbreaking program, Nayms provides coverage for US named windstorm events with a loss trigger above $60 billion. The ILW’s structure aligns with other industry loss warranties, but Nayms introduces innovative elements that revolutionize the traditional approach. One such innovation is the use of USD Coin (USDC) as collateral within the segregated account, which is secured through new mechanisms and concepts. These include a digital multi-signature process, offering enhanced transparency and efficiency in the collateralization process.

Dr. David Verbeeten, Chief Commercial Officer at Nayms, highlights the broad range of benefits offered by this deal. Insured parties gain access to alternative capital, while investors can earn regulated returns on their cryptocurrencies, which are not correlated to most other financial instruments. The deal exemplifies the advantages of Nayms’ business model and technology.

Prospero Re and Guy Carpenter’s Involvement

The purchaser of the ILW is Prospero Re, a Bermuda-based insurer that is wholly owned by Resolute Global Partners. Prospero Re, known for its commitment to innovation, partnered with Nayms to secure the first-ever property catastrophe reinsurance contract denominated in cryptocurrency. Notably, the ILW incorporates a loss trigger based on the advanced catastrophe modeling technology behind Resolute Global Partners’ Footprint product. This innovative ILW introduces a transparent, timely, and highly efficient way for investors to access the property catastrophe market.

The seamless placement of the ILW was facilitated by Guy Carpenter, a leading global risk and reinsurance specialist. Acting as the sole placing broker, Guy Carpenter provided guidance to both Prospero Re and Nayms throughout the placement process, ensuring a successful transaction.

The Significance of the ILW Market

The ILW market is part of the larger global property catastrophe reinsurance market, which generates over $300 billion in annual renewal premium. The introduction of the world’s first crypto-denominated ILW by Nayms opens up significant opportunities for insurers, insureds, and investors in this market. Building upon the success of this groundbreaking ILW, Nayms remains committed to reshaping the insurance industry through the deployment of emerging technologies. The company invites interested parties to explore other prospective segregated accounts within Nayms’ marketplace, which offer diverse investment opportunities and estimated returns.

About Nayms

Nayms is the world’s leading crypto-native insurance marketplace, licensed in Bermuda for general insurance (IIGB) and digital assets business (DABA Class F). The company serves as a bridge between alternative capital and uninsured risk in the rapidly evolving digital assets space and other hard-to-place markets. Nayms provides the technical and legal infrastructure for diverse stakeholders, including insureds, insurers, underwriters, and brokers, to come together and transfer risk on-chain. Built on Ethereum, Nayms’ smart contract coordinates crypto-native payments, underwriting, claims handling, and capitalization for a wide variety of insurances.

About Prospero Re

Prospero Re Ltd. is a licensed reinsurance company domiciled in Bermuda and regulated by the Bermuda Monetary Authority. Wholly owned by Resolute Global Partners Ltd., Prospero Re offers both catastrophe and non-catastrophe reinsurance coverage to insurance and reinsurance companies globally. Its business spans various sectors, including property, marine, offshore energy, aviation, and more. Prospero Re is committed to delivering meaningful solutions to its clients’ needs and holds an ‘A’ rating from Kroll Bond Rating Agency.

About Guy Carpenter

Guy Carpenter & Company, LLC is a leading global risk and reinsurance specialist with a presence in over 60 offices worldwide. The company combines broking expertise, strategic advisory services, and industry-leading analytics to help clients adapt to emerging opportunities and achieve profitable growth. As a business of MarshMcLennan, a global professional services firm, Guy Carpenter delivers tailored solutions to clients across the globe.

For more information on launching insurance vehicles at Nayms or exploring investment opportunities, interested parties can contact the company directly or visit their website.

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