New all-perils cat bond strengthens access to capital markets, Covéa says

French mutual insurance society Covéa Group said today that its successful sponsorship of a new €120 million Hexagon II Reinsurance DAC (Series 2019-1) catastrophe bond transaction has strengthened its access to global capital markets as a source of reinsurance.

The deal, which completed recently, was Covéa Group’s second catastrophe bond issuance, following on from a €90 million Hexagon Re DAC transaction back in 2017.

Covéa’s second cat bond issuance saw the firm expand the coverage to include all natural perils, while also successfully upsizing the deal by 20% during the issuance process, thanks to cat bond investor demand.

Today, the insurer announced the successful procurement of €120 million of reinsurance from Irish incorporated special purpose vehicle Hexagon II Reinsurance DAC.

Hexagon II Re issued and sold the notes to cat bond investors, to provide Covéa with a three year source of fully collateralised reinsurance protection, backed by the capital markets.

The Hexagon II Re cat bond provides Covéa Group with reinsurance protection against certain storm risks and other weather loss events in France, with the coverage incepting on January 1st 2020.

The per-occurrence protection means that for any payouts to come due, Covéa’s losses from a single storm or weather event must surpass a pre-defined trigger point.

With its latest cat bond, the company says it has, “strengthened its presence in the non-US catastrophe bond market.”

Commenting on the successful second cat bond, Covéa’s Pierre Michel, General Manager Reinsurance and International, said, “The issuance of Hexagon II Re allows us to further diversify our reinsurance capabilities and strengthen our access to global capital markets in a secure legal and financial environment.”

“We are delighted by the welcome given by investors to this new issue, which demonstrates the relevance of our commitment to the markets and allows us to benefit from fully collateralised multi-year coverage, which contributes to the Group’s financial protection,” Michel continued.

The main win for Covéa with its latest cat bond is the fact it now covers almost every major weather related natural catastrophe peril the insurer is exposed to.

In bringing this transaction with its expanded peril coverage and securing execution at attractive pricing, the notes priced at the lowest-end of guidance, Covéa has opened up the capital markets for what could be a useful and expandable source of multi-peril reinsurance coverage in the coming years.

By securing this latest cat bond deal the firm may have opened up an efficient source of reinsurance capital that it can return to, to reduce volatility caused by losses and secure access to capacity that can support its continued growth.

You can read all about the Hexagon II Reinsurance DAC (Series 2019-1) catastrophe bond about every other cat bond transaction in the Artemis Deal Directory.