Atmos Re cat bond is “innovative earnings protection” for UnipolSai: WTW

The securities division of reinsurance broker Willis Re, Willis Towers Watson Securities (WTW Securities), which acted as the lead structuring agent and bookrunner for the recently completed €45 million Atmos Re DAC catastrophe bond transaction, has said that the deal provides its sponsor with innovative earnings protection.

As shown by the Artemis Deal Directory, Atmos Re launched in February 2019, providing Italian sponsor UnipolSai Assicurazioni S.p.A with €45 million of capital markets backed reinsurance protection against severe weather related perils in Italy, including atmospheric phenomena, snow pressure, and flood risks.

Following the successful completion of the transaction, which is just the second catastrophe bond that UnipolSai has sponsored and the first that provides cover for weather risks (with the other deal providing the sponsor with reinsurance protection for Italian earthquake risks), WTW Securities has commented on both its participation and on the deal more broadly.

WTW Securities structured and placed the deal with reinsurance giant Munich Re acting as Co-Manager, while Towers Watson (Bermuda) acted as the independent modelling agent on the transaction.

The broker explains that Atmos Re provides its sponsor with innovative earnings protection for non-peak perils, ultimately bringing this type of innovation to the insurance-linked securities (ILS) market going into 2019.

“The Atmos Re program symbolises the agility of UnipolSai to use all sources of reinsurance capacity available in the market to achieve its reinsurance protections. It brought to the ILS market a pioneering non-peak aggregate earning volatility cover, closer to the original risk and on new perils. In particular Atmos Re was adjusted to fit the current appetite of both traditional reinsurers and capital market investors.

“This further demonstrates how both markets can collaborate, leveraging on our embedded ILS capabilities within Willis Re, for the benefit of both UnipolSai and its business partners,” said Alkis Tsimaratos, Managing Director, Head of EMEA West/South, Willis Re.

The reinsurance broker continues to explain that in conjunction with the Atmos Re placement, it placed a €45 million layer that sits directly under the Atmos Re layer, which, attracted a diversified panel of traditional reinsurance market players and which had identical characteristics as the Atmos Re layer, but with a risk period of one-year, as opposed to the three years of cover provided by Atmos Re.

Marc Guy Victor Sordoni, Head of Reinsurance at UnipolSai, commented: “With the Atmos program, UnipolSai will be protected against frequency of retention of non-peak peril natural catastrophic events, reducing the volatility of our financial results. We are pleased to have brought a transaction to the market which optimizes the appetite of capital market investors and traditional reinsurers, and extends the range of perils and structures that ILS investors can offer on our program. This is in line with our long term strategy to build sustainable relationships with this market as an alternative way to access reinsurance capacity.

“We thank our trusted advisors Willis Re and Munich Re for their dedication and assistance throughout the course of this transaction. The success of Atmos Re could not have been achieved without their help.”

WTW Securities explains that the overall Atmos program was designed in a way that would maximise the interests of both sets of capacity providers at the most comfortable risk return level, while ensuring the optimal size and price available to its sponsor.