CCR Re, the French state-owned reinsurance firm, has renewed its innovative collateralised reinsurance sidecar transaction 157 Re for 2020, we can report.
Last year CCR Re introduced 157 Re as its collateralised reinsurance sidecar vehicle for property catastrophe risks, the first and still only insurance-linked securities (ILS) vehicle to be governed by French law.
It was a groundbreaking transaction as France, unlike many other countries, had not enacted its own insurance-linked securities (ILS) laws. But CCR Re and its partners in the deal found a way to leverage existing French legislation that allows securitisation of assets.
CCR Re set up 157 Re as a mutual securitization fund, known as a “fonds commun de titrisation”, a structure often used for securitised arrangements in France.
The structure of 157 Re was also licensed by the French supervisory authority, Autorité de Contrôle Prudentiel et de Résolution, while the French tax authorities provided formal guidance about the tax treatment of the structure for the investors as well.
Now, we can report that CCR Re has renewed its 157 Re reinsurance sidecar for 2020, with a new 157 Re 20 arrangement to bring fresh capital in through the securitised vehicle to support its property catastrophe risk underwriting book through 2020.
We understand the coverage and other details are identical to the 2019 arrangement, which was entered into from April 1st, aside from this 157 Re 2020 issuance appears to have been executed for the January reinsurance renewal so likely runs the entire year.
So the transaction must feature again a 25% quota share of CCR Re’s worldwide property catastrophe portfolio, providing the company with a source of collateralised retrocessional reinsurance capacity to support its growth and continued diversification.
As with last year’s 157 Re sidecar arrangement, we assume this 2020 issuance also provides CCR Re with full Solvency II regulatory credit.
It’s encouraging to learn that CCR Re has continued with the sidecar for 2020 and it appears 157 Re could play a pivotal role in bringing efficient retrocessional reinsurance capacity from the capital markets into its business operations.
For details of many reinsurance sidecar investments and transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.