Gothaer seeks €100m German flood reinsurance with debut Yardstick Re catastrophe bond

Gothaer Allgemeine Versicherungs AG, a German insurance company, has entered the catastrophe bond market for its debut sponsorship, targeting €100 million or more in reinsurance limit to cover flood events in Germany with a Yardstick Re DAC (Series 2026-1) cat bond issuance, Artemis can report.

This is the first catastrophe bond that is solely focused on flood risks in Germany and sees Gothaer Allgemeine Versicherungs AG (Gothaer), a non-life property and casualty focused insurance company focused on private client and business coverage and part of the BarmeniaGothaer Group, targeting cat bond coverage for the first time as well.

Catastrophe bonds that only cover flood exposure are also a relative rarity in the catastrophe bond market, so this is an interesting deal to learn about and one that could be a good demonstration for other re/insurers carrying concentrations of flood risk exposure.

We have seen German flood exposure as a risk within a number of multi-peril and windstorm focused cat bonds over the years, most notably as a named peril within the King Max Re DAC 2023 issuance for VKB Re. Other multi-peril cat bonds cover flood exposures in the US, Japan and elsewhere.

When it comes to cat bonds solely covering flood exposures, there is only really the Vision 2039 – 2025-1 for the UK’s Flood Re, as well as the named storm-linked flood exposed FloodSmart Re series of deals for the US’ NFIP.

As a result, standalone flood risk cat bonds are extremely rare and when one like this Yardstick Re appear they are notable deals for the market.

Yardstick Re DAC has been established in Ireland as a designated activity company, which is a multi-arrangement SPV, for use as a catastrophe bond note issuer.

For its first issuance, Yardstick Re DAC is offering a €100 million tranche of Series 2026-1 Class A notes to investors, with the proceeds from their sale set to collateralize a multi-year reinsurance agreement with the sponsor Gothaer.

The currently €100 million tranche of Series 2026-1 notes that Yardstick Re DAC is offering are designed to provide insurer Gothaer with four years of reinsurance protection to cover certain losses from major flood events in Germany.

This German flood reinsurance coverage is structured on an indemnity trigger and per-occurrence basis for the sponsor.

The currently €100 million of Series 2026-1 Class A notes being offered by Yardstick Re DAC would attach their coverage at €1.25 billion of losses and exhaust coverage at €1.35 billion, we are told.

The risk is relatively remote, we understand, with the Yardstick Re 2026-1 Class A notes having an initial attachment probability of just 022% and an initial expected loss of 0.19%.

The notes are being offered to cat bond investors with price guidance for a risk interest spread of 2%, which is interesting as we’re told there is no range being offered.

Also of note is the fact that these Yardstick Re DAC Series 2026-1 catastrophe bond notes are set to be rated by Moody’s Ratings, with a rating of Baa2 (sf) anticipated.

That would also be a rarity, as very few natural catastrophe bonds ever get rated. But as we’ve explained before, ratings are viewed as a beneficial feature for cat bond transactions by certain investors and sponsors, while ratings can also benefit transaction execution by enabling access to a broader range of investors that can only allocate to rated fixed income securities.

In analysing the Yardstick Re DAC cat bond transaction, Moody’s Ratings commented on some useful facts regarding the level of risk being ceded.

In particular Moody’s Ratings explained how remote the risk is, “The initial attachment level of €1.25 billion corresponds to approximately a 1-in-448-year return period (0.22% annual attachment probability), with a low initial modeled one-year expected loss of 0.21%. The attachment level is more than double the insurers’ reported losses incurred in the most severe German flood recorded – Bernd in 2021.”

On the sponsor, “The Ceding Insurer reported over €2.8 billion in gross written premium in 2025, and maintained a Solvency II SCR coverage ratio of 181%. Gothaer, the lead non-life insurance subsidiary of BarmeniaGothaer Group, has a demonstrated track record of managing large flood events, including Storm Bernd in 2021, which generated approximately €590 million in gross claims losses across the group.”

Moody’s Ratings also highlighted that coastal flood risks are included, but that this is not modelled within the Moody’s RMS flood model utilised, although “only approximately 8.5% of net limit is situated in CRESTA zones with coastal exposure, and historical coastal flood events in Germany have not produced losses approaching the attachment level,” while storm surge is often excluded from German property insurance policies.

Finally, on risk concentration Moody’s Ratings said that, “Approximately 52% of the initial modeled one-year expected loss is concentrated in Nordrhein-Westfalen, reflecting both the geographic distribution of insured exposure and the flood hazard profile of the region.”

This is one of the benefits of having catastrophe bonds rated, the fact an additional analysis and view is provided which can help investors in understanding the exposure and importance factors about the cat bond deal.

It’s good to see this new standalone Germany flood catastrophe bond coming to market, bringing a new sponsor in Gothaer to the space at the same time.

Given the levels of maturing cat bond risk capital coming back to funds and investors over the next few weeks, as well as continuing investor appetite for catastrophe bonds, there should be ample capacity in the market to absorb more deals that bring truly diversifying perils like this.

You can read all about this Yardstick Re DAC (Series 2026-1) transaction and every other catastrophe bond deal in our extensive Artemis Deal Directory.