French reinsurer SCOR has completed its latest catastrophe bond, securing approximately $228m of multi-year retrocessional reinsurance cover for itself on a fully collateralised basis. Atlas Reinsurance VII Limited saw SCOR offload certain U.S. hurricane, U.S. earthquake and European windstorm risks to capital market investors on both aggregate and per-occurrence basis’ using industry loss index triggers.
SCOR uses cat bonds as part of its policy of diversifying its capital protection tools. With Atlas Re VII, the ninth cat bond transaction in our Deal Directory from SCOR to use the Atlas name, SCOR has secured what they are calling “twofold protection” of $60m Class A Notes providing protection against U.S. hurricanes and earthquakes, and €130m Class B Notes covering European windstorm risks. The risk period for Atlas Re VII runs from 1 January 2013 to 31 December 2015. Both tranches use industry loss triggers, with PCS doing the honours for the U.S. hurricane and earthquake risk and PERILS reporting on European windstorm risks.
Atlas Reinsurance VII Limited is an Irish reinsurance vehicle. Aon Benfield Securities Inc. structured the deal and also acted as a bookrunner alongside Natixis and BNP Paribas. Standard & Poor’s rated the Atlas VII Class A Notes at BB-, and Atlas VII Class B Notes at BB.
SCOR said that the protection of its capital constitutes a strategic axis for the Group and capital market solutions, such as catastrophe bonds, play a core role in this strategy. As well as the nine separate issuances of cat bonds, SCOR also taps the capital markets in other ways, bringing the total number of capital market issuances to 13:
- Atlas Reinsurance plc, Atlas Reinsurance II plc, Atlas Reinsurance III plc, Atlas Reinsurance IV plc, Atlas V Capital Ltd., Atlas VI Capital Ltd. (Series 2009-1), Atlas VI Capital Ltd. (Series 2010-1), Atlas VI Capital Ltd. (Series 2011-1/2), and now Atlas Reinsurance VII Limited;
- the Helix cat bond issued by Converium, which was integrated into the SCOR group in 2007;
- a contingent capital programme;
- two mortality swaps providing additional protection against major pandemics, natural catastrophes and terrorist attacks.
SCOR is clearly dedicated to tapping the capital markets for sources of retrocessional reinsurance cover when the market conditions and prices are attractive. A leader in the field, SCOR display an innovative approach to securing their own capital protection.
Natixis, one of the bookrunner on Atlas Re VII, said; “The strong current appetite from investors for this transaction type not only allowed optimizing the final spread proposed to investors but also increasing significantly the global size of the transaction to an equivalent of €176 million.”
More information on Atlas Reinsurance VII, including pricing, can be found in our catastrophe bond Deal Directory.