SCOR: $300m Atlas Capital UK 2018 cat bond shows “capacity to innovate”

by Artemis on June 1, 2018

French reinsurance company SCOR said that the recent completion of its $300 million Atlas Capital UK 2018 PLC (Series 2018 ISPV 1) catastrophe bond, which is the first UK domiciled cat bond transaction under new legislation, is aligned with its strategic goals and demonstrates the reinsurers “capacity to innovate.”

The Atlas Capital UK 2018 catastrophe bond provides SCOR with $300 million of multi-peril retrocessional reinsurance protection across a four-year term and on an annual aggregate basis, covering the reinsurer for losses from U.S. named storm, U.S. and Canada earthquake and European windstorm risks.

The cat bond is structured with triggers that use regionally weighted industry loss estimates, which also take into account a per-event deductible for each of the covered perils.

SCOR noted this morning that the issuance was “part of its policy of diversifying its capital protection tools” and that the company now becomes “the first reinsurer to use the new UK ILS regime to issue a cat bond.”

The Atlas Capital UK 2018 catastrophe bond is the first full cat bond issuance under the UK ILS regime, a milestone that places the UK now ahead of other domiciles where only collateralized reinsurance has been transacted so far.

SCOR said that the transaction has received full approval from both the UK’s Prudential Regulatory Authority (PRA), as well as other UK regulatory authorities.

The new catastrophe bond from SCOR was priced on the 24th May, with the coupon settling to offer investors a 6% return which was the bottom end of pricing guidance. The transaction was then completed yesterday, 31st May.

The company said that the catastrophe bond aligns with its strategic goals, of protecting its capital, having regularly used capital market solutions to achieve this, including 15 transactions since 1999, across cat bonds, reinsurance sidecars, mortality bonds and contingent capital solutions.

Victor Peignet, CEO of SCOR Global P&C, commented, “This new cat bond offers SCOR additional multi-year collateralized protection, including for European Windstorm, which is in line with the growth of our portfolio as anticipated in “Vision in Action”.”

He went on to explain that using the new UK ILS regime demonstrates the reinsurers ability to innovate.

“Being the first company to sponsor a cat bond on the London market shows SCOR’s confidence in the UK’s ILS regime and our commitment to the cat bond market, as well as our capacity to innovate,” Peignet explained. “I would like to sincerely thank the PRA (Prudential Regulation Authority) and the UK regulatory authorities for their assistance and responsiveness throughout this process.”

GC Securities, the capital markets arm of reinsurance broker Guy Carpenter, acted as Sole Structuring Agent and Bookrunner for the cat bond transaction, while law firm Clifford Chance advised SCOR.

You can read all about this Atlas Capital UK 2018 PLC (Series 2018 ISPV 1) United Kingdom domiciled catastrophe bond and every other transaction since the market began in the Artemis Deal Directory.

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