Ledger Investing announces Secondary Trade for its Casualty Insurance Securitization

Julien Brissonneau
Ledger Investing
Published in
4 min readNov 2, 2022


The team has built an open insurance system to connect risk to capital. Policy and claims management systems provide dynamic, actionable data useful beyond securities issuance.

Today, Ledger Investing is announcing the first-ever secondary market trade of a casualty insurance security on its marketplace. This trade was made possible by using Ledger’s financial software stack, which allowed two sophisticated investors with very different investing backgrounds (one of whom had no experience with insurance as an asset class) to review, evaluate, and price a diversified portfolio of casualty insurance risk. The two investors agreed on the terms of the secondary market transfer, demonstrating the potential for Ledger’s technology to revolutionize the alternative reinsurance industry.

Parallel layers of risk transfer

This occurred without any impact on risk originators or the credit quality of the paper backing them. In fact, risk originators have taken their first steps into a larger world.

This transaction is possible thanks to the open insurance system built by Ledger Investing. Data is flowing freely from insurance companies to investors. Dynamic APIs support intelligent software performing sophisticated cohort analysis on updated insurance policies portfolio data. The challenge for any insurance policy portfolio performance is the prediction of all possible loss outcomes. Real-world outcomes take time to materialize. Ledger’s marketplace is transformative because the dynamic valuation of securities is relevant not only at issuance but during the securities' lifetime. This transaction confirms the value of Ledger data and Ledger valuations because, for the first time, investors are ready to trade on it in a secondary offering.

Ledger connects directly to policy management systems and dynamic data. The startup believes the future of casualty risk implies connected and standardized data. Casualty insurance companies will be able to price their product accurately and efficiently to compete in the modern world. That is what Ledger is here to do.

3 parallel layers

Let’s think of our economic world as layer number one, the emerged and visible one. Here, economic agents participate in risky trades, where goods and services exchanged are inherently risk vehicles. Individuals, businesses, and assets living in this layer are risky but insurable thanks to the second layer.

The second layer is the insurance industry's primary market. It exists to reduce financial uncertainty and make accidental loss manageable for actors in the first layer. The insurance industry does this by substituting payment of a small, known fee — an insurance premium — in exchange for promises to pay in the event of large losses. This is where insurance coverages are issued. Insurers make it possible for people to protect against risks: financial losses due to accidents, natural disasters, and other unforeseen events.

The third layer of risk is the financing of insurance risks. This is the insurance secondary market, where risks are transferred, pooled, and reinsurance is created. Insurance risks are also securitized here. This is the back end of the insurance value chain, traditionally a world of illiquid alternative investments. Ledger Investing is changing that world.

Risk and capital connecting across the economy

Value for risk originator: the end of illiquidity premiums

Today's transaction is one step toward a liquid secondary market for casualty insurance securitization. The absence of a liquid secondary market for casualty risk implies the payment of an “illiquidity premium” by risk originators. Market liquidity refers to how quickly an asset can be bought or sold, and the existence of an “illiquidity premium” is the additional return that investors require to compensate for the risk of default and interest rate uncertainty inherent in longer-dated securities relative to shorter maturities ones.

Value for Insurance Investors: valuation, trust, and access

The existence of liquidity is desirable for investors who get pricing information from the market. Actual transactions support financial securities valuation. In the future, transparency will help build trust in casualty insurance investing as new information will be reflected in securities pricing. Information can emerge from insurance-related events or capital market shifts. Accessibility of the asset class can be improved: the development of secondary market participation may be accessed by a wider investor base as the emerging asset class establishes its track record.

Create a new standard in insurance financing

Ledger is a technology company disrupting the insurance industry's financing. Ledger Investing and Ledger Capital Markets were formed to enable insurers to create substantial value by securitizing insurance risk while providing investors with an opportunity to invest directly in a new and growing asset class. We are backed by a combination of leading tech VCs and strategic insurance industry investors.

Our live premium tracker is publicly available.

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