Reinsurer SCOR have announced the successful completion of their latest catastrophe bond transaction, Atlas VI Capital Ltd. 2011. It’s SCOR’s eighth time tapping the capital markets for catastrophe cover through one of their Atlas vehicles and this latest deal saw them issue three tranches of notes in two series, providing them just over $330m of cover for U.S. hurricanes, U.S. earthquakes and European windstorms.
The transaction had upsized significantly during the marketing phase, from an initial size of $200m, SCOR grew the U.S. hurricane and earthquake cover significantly while shrinking the European windstorm tranche slightly. Standard & Poor’s confirmed their preliminary ratings for the $125m Series 2011-1 U.S. hurricane and earthquake Class A notes as ‘B’, for the $145m Class B notes as ‘B+’ and for the €50m Series 2011-2 European windstorm Class A notes as ‘B’.
It’s encouraging to see SCOR repeatedly affirming their commitment to the cat bond markets. They are fast becoming one of the most prolific sponsors of insurance-linked securities in the market.
SCOR’s press release on the completion of Atlas VI Capital:
SCOR further extends its Atlas VI catastrophe bond programme
Within the framework of its capital shield policy, one of its four strategic cornerstones, on 12 December 2011 SCOR successfully placed a new catastrophe bond (“cat bond”), Atlas VI Capital Limited Series 2011-1 and 2011-2, which will provide the Group with USD 270 million of protection against US Hurricanes and Earthquakes and EUR 50 million of protection against European windstorms, for a risk period extending from 13 December 2011 to 31 December 2014 for the US series and 31 March 2015 for the European series. This transaction will succeed Atlas V Capital Limited, which is due to mature on 24 February 2012 and provides similar geographical cover as the one of the Series 2011-1 of USD 200 million.
Atlas VI Capital Limited is a special-purpose company created in 2009 and incorporated under the laws of Ireland. It may issue a series of cat bonds over several years. Aon Benfield Securities Inc. and Natixis managed the transaction and the book on the deal. Standard & Poor’s rates series 2011-1 at B, series 2011-1 B at B+ and series 2011-2 A at B.
The loss payments covered by this cat bond are based on market share factors applied to the market insured loss, as reported by PCS for the US and by PERILS for Europe.
The protection of its capital constitutes a strategic axis for the Group. SCOR regularly uses solutions proposed by the capital markets, with twelve transactions completed to date:
- Atlas Reinsurance I, II, III and IV, Atlas V and Atlas VI Series 2009-1, Series 2010-1 and Series 2011-1&2;
- the Helix cat bond issued by Converium, which was integrated into the SCOR group in 2007;
- a contingent capital programme;
- two mortality swaps providing additional protection against major pandemics, natural catastrophes and terrorist attacks.
Details of all of SCOR’s catastrophe bond transactions can be found in our Deal Directory.