France headquartered global reinsurance company SCOR said it is pleased with the support investors have shown its latest catastrophe bond, the $200 million Atlas Capital Reinsurance 2020 DAC (Series 2020-1) transaction, while also praising the Irish regulators efficiency and the fact it resulted in a Solvency II first.
SCOR’s latest catastrophe bond sponsorship was not without its problems though, coming at the same time as the global financial and capital markets went into meltdown over the Covid-19 pandemic.
SCOR first returned to the catastrophe bond market in mid-March with the new Atlas Capital transaction, looking to expand on its capital markets backed retrocessional reinsurance with a $200 million deal target
A couple of weeks later, with the impacts of the Covid-19 coronavirus pandemic being felt widely across capital markets, this began to have an effect on the insurance-linked securities (ILS) market, causing the reinsurer to decide to pull the cat bond deal, withdrawing the Atlas Capital 2020 cat bond issuance until capital markets settled down.
SCOR then returned in mid-April, but with a smaller sized $150 million Atlas Capital 2020 cat bond issuance, but with pricing elevated to reflect increasing spreads in the cat bond market and the expectation rates were on the rise across reinsurance.
At the second trying, the catastrophe bond issuance successfully returned to its original target size of $200 million, but pricing moved to the top-end of the revised upwards guidance. The final coupon was 8.25% and the deal had first hit the market with guidance of 6.75% to 7.5%, which clearly shows the significant hike in rate paid for this issuance.
But the important thing was to get the deal away successfully for SCOR, securing the company $200 million of multi-year retrocessional reinsurance against losses from named storms in the U.S. and earthquakes in the U.S. and Canada.
SCOR said the capital markets, through catastrophe bonds, are an important part of its capital shield.
Interestingly, the reinsurer noted that Atlas Capital Reinsurance 2020 DAC now takes the honour of becoming the first index-based trigger cat bond approved in Ireland under Solvency II.
SCOR reverted the issuing vehicle back to Dublin, Ireland for this catastrophe bond, having issued two in the UK before this, as it tried out the new ILS legislation enacted in that country to provide it with domicile optionality when it came to issuing deals.
Back in Ireland SCOR had a good experience with the regulator it seems, so it will be interesting to see whether the reinsurer reverts back to the UK again in future, or elects to stick with Ireland again, where it had previously domiciled catastrophe bonds and reinsurance sidecars.
SCOR also noted the support of investors in helping the company get its latest catastrophe bond successfully issued, despite the financial market uncertainty affecting the world.
Jean-Paul Conoscente, CEO of SCOR Global P&C, commented on the transaction, “SCOR is pleased to announce the success of this new catastrophe bond issue. The very positive response from investors has enabled us to scale up the issue. This is a true testament to SCOR’s legacy as a frequent and innovative sponsor on the ILS market. I would like to warmly thank the Central Bank of Ireland and the Irish regulatory bodies for the efficiency with which they reviewed and approved this transaction.”
You can read all about this Atlas Capital Reinsurance 2020 DAC (Series 2020-1)catastrophe bond from SCOR and every other cat bond transaction in the Artemis Deal Directory.