Atlas Capital UK 2019 PLC (Series 2019-1)

This latest Atlas catastrophe bond is the second transaction domiciled in the United Kingdom and sponsored by French reinsurance firm SCOR.

A new vehicle has been registered in the UK for this transaction, named Atlas Capital UK 2019 PLC we understand.

A single tranche of notes will be issued, which we’re told is currently targeting at least $175 million of retro reinsurance for the French firm.

The $175 million (or greater) tranche of Series 2019-1 notes being issued by Atlas Capital UK 2019 will provide SCOR with a fresh source of fully collateralised capital markets backed retro reinsurance covering it against losses from multiple perils, on an  industry loss trigger basis and across a four-year term.

The annual aggregate coverage this Atlas Capital UK 2019 cat bond will provide SCOR is for losses from U.S. named storm risks, including Puerto Rico and the U.S. Virgin Islands, U.S. and Canada earthquake risks, and European windstorm risks.

We’re told there is an index deductible, per-event, for each of the perils and the transaction uses regionally weighted industry loss indices from PCS for the named storm and quake risks, as well as PERILS for the European windstorm exposure.

The $175 million of notes have an initial expected loss of 5.46%, we’re told, which is a riskier layer of SCOR’s retrocessional reinsurance program than the 2018 Atlas Capital cat bond (that launched with an EL of 3.24%).

As a result, the pricing expectations will clearly be higher and this new cat bond from SCOR is to be marketed to investors with guide pricing of 11.25% to 12%, we’re told.

The multiple is certainly set to be higher than the previous year’s cat bond from SCOR, but sitting lower down in its retro tower that is to be expected.

We understand this cat bond issuance is set to be completed prior to the June renewals.

Update 1:

This cat bond has upsized to $250 million for SCOR, while the notes, which have an initial expected loss of 5.46%  and were at first offered to investors with price guidance in a range from 11.25% to 12%. But we’re now told that this guidance has tightened towards the upper-end of the range, at 11.75% to 12%.