Groupama now targets up to €120m convective storm cover from Quercus II Re cat bond

Groupama, the French mutual insurance and reinsurance company, has raised its target for fully-collateralized convective storm reinsurance protection from the capital markets from its new Quercus II Re DAC catastrophe bond, with now up to €120 million of protection sought, Artemis understands.

Groupama returned to the catastrophe bond market in November, with its initial target being to secure €100 million in reinsurance against losses from convective storms in France thought this Quercus II Re cat bond deal.

As we reported at the time, this Quercus II Re cat bond is the first to solely cover the severe convective storm peril since 2010.

Groupama has sponsored catastrophe bonds a number of times before and still has a €150 million windstorm reinsurance cat bond Quercus Re DAC 2024-1 that remains in-force at this time.

Details of every Groupama catastrophe bond can be found here.

But this new Quercus II Re DAC catastrophe bond looks to protect Groupama against a peril that has been driving rising losses in recent years, being severe convective storm and with that coverage on an aggregate basis.

Quercus II Re DAC was initially offering €100 million of notes to provide Groupama and certain subsidiaries with multi-year, indemnity triggered, annual aggregate reinsurance protection against losses from convective storms affecting France across two annual risk periods from January 2026 through to the end of 2027.

Now, we’re told by sources that the offering size has been increased slightly, with between the initial €100 million and a current maximum target of €120 million of reinsurance now sought for Groupama.

The now up to €120 million of notes Quercus II Re is offering come with an initial expected loss of 1.82% and were first offered to investors with price guidance in a range for a spread of between 10.5% and 11.5%.

We’re now told the price guidance has been revised to just 11%, so a spread at the mid-point of the initially marketed range.

As a result, this new Quercus II Re cat bond is another data point showing cat bond investors continue to remain disciplined and demand a certain level of return, especially for riskier layers, or for transactions covering secondary perils and aggregates, such as this.

It’s encouraging to see Groupama looking to potentially upsize this new cat bond, as it shows the insurer recognising the efficiency of catastrophe bond backed reinsurance capital and the benefits of being able to lock-in multi-year protection.

You can read all about this new Quercus II Re DAC catastrophe bond and every other cat bond deal in the Artemis Deal Directory.