The second catastrophe bond to be issued in the UK for sponsoring French reinsurance company SCOR is set to upsize, as the multi-peril Atlas Capital UK 2019 PLC (Series 2019-1) transaction is expected to reach $250 million.
That’s a significant uplift from the $175 million starting point for this latest UK domiciled catastrophe bond transaction, demonstrating investor appetite to support SCOR’s retrocessional reinsurance program in securitized form.
The annual aggregate retro reinsurance coverage this Atlas Capital UK 2019 cat bond will provide SCOR will cover it against certain 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.
Coverage is on a regionally weighted industry loss index trigger basis, provided by PCS and PERILS, with an index deductible, per-event, for each of the perils.
The transaction launched offering a single $175 million (or greater) tranche of Series 2019-1 notes, which we now know from sources to have increased to $250 million thanks to investor demand.
The notes, which have an initial expected loss of 5.46%, 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%.
So for reinsurance company SCOR, the enlarged coverage this latest cat bond will provide is likely to come at pricing above the mid-point of guidance. But given the loss experience of ILS and catastrophe bond investors in recent years, that’s really no surprise at this stage in the market cycle.
We understand the Atlas Capital UK 2019 cat bond will be priced at the end of this week and issuance is slated for the end of the month.
We’ll keep you updated as this UK domiciled Atlas Capital UK 2019 PLC (Series 2019-1)catastrophe bond comes to market and you can read about this and every other transaction since the market began in the Artemis Deal Directory.
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