French mutual insurance society Covéa Group has successfully sponsored its first catastrophe bond, the €90 million Hexagon Reinsurance DAC (Series 2017-1) transaction and this morning hailed it as the first to be exposed to French windstorm risks on an indemnity and aggregate basis.
The Hexagon Re catastrophe bond will provide Covéa Group subsidiaries with a multi-year source of fully-collateralized reinsurance protection against losses from European windstorms striking France, Andorra and Monaco.
The successful issuance of this cat bond deal, which completed and settled on Friday, marks the first visit to the capital markets for a full securitisation of insurance risk for Covéa Group and the company is keen to demonstrate the firsts achieved with this innovative transaction.
Pierre Michel, Head of Group Reinsurance at Covéa, commented on the successful completion of the Hexagon Re cat bond, “With this successful transaction, Covéa reaffirms its innovation capabilities. The Group has now further diversified its access to worldwide reinsurance capacity, within a secure legal and financial framework. This initiative confirms the Group’s strategy with respect to reinsurance protection.”
Michel went on to highlight the first that the company has achieved with this cat bond sponsorship.
“This is the first indemnity trigger, aggregate basis cat bond issuance addressed specifically at covering windstorm across Metropolitan France,” he explained.
Of the nearly 500 catastrophe bond transactions listed in the Artemis Deal Directory, this is the first pure European windstorm risk transaction that has been structured on an aggregate basis.
It’s also the first indemnity transaction that is solely exposed to French windstorm risks on an aggregate basis as well.
In the past there have been aggregate cat bonds which contain come European windstorm risk, but they are largely providing retrocession to major reinsurers and so are structured on an industry loss trigger basis.
The €90 million Hexagon Re cat bond will provide Covea Group with reinsurance cover against windstorm losses across Metropolitan France beginning January 1st 2018 and running for four years.
European windstorm risks have become relatively scarce in the cat bond market in recent years, due to the low cost of traditional reinsurance capacity.
However, the fact this catastrophe bond has been successfully placed on an aggregate and indemnity basis and with pricing that settled below the initial guidance, could stimulate other European insurers to look at the cat bond market again for a portion of their reinsurance protection.
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