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SCOR prices new Atlas Capital cat bond 17% below initial guidance mid-point


France-headquartered global reinsurance firm SCOR has achieved a strong pricing result in the catastrophe bond market, as its new Atlas Capital DAC (Series 2023-1) multi-peril retrocession deal has now been priced roughly 17% below the initial mid-point of spread guidance.

scor-office-londonIt’s one of the bigger price falls seen in the catastrophe bond market of late, although practically every transaction has priced down in recent weeks, while also increasing in size.

It’s an indication of the strong investor appetite for catastrophe bond investments at this time, as well as the capital inflows that some cat bond fund managers have been securing.

SCOR has seemingly targeted price over size for its new cat bond, opting to keep the new Atlas Capital 2023-1 deal to provide its initial $75 million target of annual aggregate and weighted industry loss trigger based retro reinsurance protection.

The notes now priced will provide SCOR retro reinsurance over a roughly three year term to the end of May 2026, covering potential losses from the perils of US named storm and earthquake risks, Canada earthquakes and European windstorms.

At just $75 million the new cat bond falls a long way short of replacing SCOR’s soon to mature $250 million Atlas Capital UK 2019 PLC (Series 2019-1) cat bond deal.

But, since that issuance SCOR has built out a larger collateralised reinsurance sidecar platform with investor partners and has also pulled back on property catastrophe underwriting somewhat, so it perhaps doesn’t require a full replacement for that expiring retro cover.

When this new Atlas Capital DAC 2023-1 cat bond was initially launched, the $75 million of notes on offer came with an initial base expected loss of 2.1%, and were offered to cat bond funds and investors with spread price guidance in a range from 8.25% to 9.25%.

That price guidance was updated to a range of 7.25% to 8.25%, as we reported earlier this week, which indicated a roughly -11.5% decline from the initial mid-point.

But, we’re now told that the still $75 million of notes that Atlas Capital DAC will issue have been priced at the bottom of that already reduced spread guidance, with the pricing fixed at 7.25%.

That represents a roughly 17% drop in the spread while these notes were marketed, a very strong result for SCOR, which equates to a multiple-at-market of roughly 3.34 times the expected loss.

For comparison, SCOR’s last industry-loss and annual aggregate cat bond was sponsored by the reinsurer roughly a year ago. That Atlas Capital Re 2022 deal had an initial expected loss of 3.17% and priced to pay investors a spread of 9.5%, so a multiple-at-market of roughly 3 times the expected loss.

This will be the seventeenth cat bond under an Atlas name, since SCOR sponsored its first right back in the year 2000.

You can read all about this Atlas Capital DAC (Series 2023-1) catastrophe bond from SCOR and every other cat bond transaction in the Artemis Deal Directory.

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