Covéa secures €250m Hexagon IV Re 2025-1 cat bond, priced at bottom of reduced guidance

Covéa Group, the French mutual insurer, has now successfully priced its new Hexagon IV Re Ltd. (Series 2025-1) catastrophe bond issuance, securing the upsized target of €250 million in fully-collateralized reinsurance protection, while both tranches of notes were eventually priced at the bottom end of reduced guidance, Artemis has learned.

Covéa Group returned to the catastrophe bond market earlier in October, seeking to sponsor its fifth cat bond deal and targeting expanded coverage in both occurrence and aggregate formats.

Covéa’s goal was to build-out its capital markets backed reinsurance with this new cat bond through the inclusion of an aggregate tranche of notes with this deal, as well as expanded protection to cover windstorm losses as in previous deals, plus cover for hail and certain other windstorm related perils.

In our first update on this cat bond, we reported that Covéa continued to target €200 million in fully-collateralized reinsurance, but the price guidance range for the spread for both tranches of notes had been lowered as the insurer targeted more cost-effective coverage.

In our second update, we were told the target size has been increased for one of the tranches of notes, taking the potential issuance size to €250 million, while at the same time the price guidance has been lowered a second time for each of the tranches on offer.

We’ve now learned that the Hexagon IV Re Series 2025-1 catastrophe bond has been successfully priced, securing Covéa the upsized €250 million of reinsurance protection and at particularly attractive pricing.

Read about all of Covéa Group’s catastrophe bonds in our extensive Deal Directory.

With this final update, Hexagon IV Re Ltd. will now sell two tranches of Series 2025-1 cat bond notes to investors, to provide €250 million of reinsurance to protect Covéa and its mutual insurers with against losses from windstorms, hail and certain other perils across France, Monaco and Andorra.

An upsized €200 million of Class A notes will provide a source of four calendar years of indemnity per-occurrence protection, while a €50 million tranche of Class B notes that did not change in size will provide indemnity annual aggregate protection over a two calendar year term.

The Class A per-occurrence notes at €200 million in size come with an initial expected loss of 2.97%.

The Class A notes were initially offered to cat bond investors with price guidance for a spread of between 5.5% and 6%, which was lowered at the first update to a revised range of between 5% and 5.5% and then fixed at 5%, which is where we’re told the spread has now been finalised and priced.

The Class B aggregate notes are €50 million in size and come with an initial expected loss of 1.16%.

The Class B notes were first offered to cat bond investors with price guidance for a spread of between 6.5% and 7%, which was revised to a lower spread price range of between 6% and 6.5% and then lowered again to between 5.75% and 6%. We’re now told these Class B notes priced to pay investors a spread of 5.75%, so again the bottom of reduced guidance.

As a result, Covéa has maximised its opportunity to secure a larger source of reinsurance from the capital markets aat an even more attractive price, once again reflecting the strong cat bond market conditions for sponsors at this time.

You can read all about this new Hexagon IV Re Ltd. (Series 2025-1) catastrophe bond from Covea Group and every other cat bond transaction issued in our Deal Directory.