Fermat backs €6m private debt transaction for Gefion Insurance A/S

Fermat Capital Management, LLC, the insurance-linked securities (ILS) and catastrophe bond focused investment manager, has completed a second private debt arrangement for Danish non-life insurer Gefion Insurance A/S with a new €6 million transaction.

Fermat completed a €10 million private subordinated debt placement for Gefion Insurance A/S back in 2017 and the new arrangement is seen as a follow-on to that deal, taking the total invested in debt issued by Gefion to €16 million for the ILS and reinsurance fund manager.

Gefion said today that is has closed this placement of Solvency II-compliant subordinated notes, with an aggregate principal amount of €6 million and backed by funds managed by Fermat Capital Management.

The proceeds of the debt transaction are to be used to strengthen Gefion’s capital base and support its on-going business in the European non-life insurance market.

Gefion is an unrated insurer and has had its troubles of late, with the Danish regulator telling the insurer it needed to raise capital and improve its solvency ratio after problems at the firm.

With its investment, Fermat is showing its confidence in the insurer and helping it to trade forwards and improve the all-important solvency metric.

Tonny Anker-Svendsen, Gefion’s CEO, commented on the deal, “We are proud that Fermat – one of the leading insurance capital investors – wants to expand its partnership with Gefion at a crucial point in time by investing in the continued development of Gefion.

“Today’s announcement validates our innovative business model and our ability to source capital from the highest-quality investors within the insurance space. This transaction is a strong endorsement of Gefion and will support our on-going strategic investor conversations.”

Fermat Capital Management is among the ILS managers that have expanded their investment strategy to include private debt transactions, targeting debt issues as an alternative way to access the insurance or reinsurance-linked returns of a sponsor.

TigerRisk Capital Markets & Advisory, a unit of the reinsurance broking specialist, acted as Gefion’s advisor in the transaction.

Investing in private debt arrangements such as this enables ILS fund managers like Fermat Capital Management to expand their provision of capital to re/insurers, delivering capital support across the risk/return spectrum and helping insurance and reinsurance companies better optimise their capital and risk profile.