For French reinsurance firm SCOR being the first company to sponsor a catastrophe bond using the new UK insurance-linked securities (ILS) regulatory regime was “not an easy process,” according to Victor Peignet.
Peignet, CEO of SCOR Global P&C, was speaking at the Monte Carlo Rendez-vous at the reinsurers media briefing and discussed the challenges that were faced in being the first.
SCOR this year sponsored the first catastrophe bond to be arranged using the new UK Risk Transformation Regulations 2017, the $300 million Atlas Capital UK 2018 PLC (Series 2018 ISPV 1) transaction.
“As we expected this was not an easy process, but I think we got support, and had good advice from the teams around us and the authorities of the market. Starting the process was difficult,” Peignet explained.
“If I look at it and I go backwards, I think it was probably three, four, five times more work than if we had issued in an environment where the experience of a previous issuance is familiar.”
This is always going to be the case in a regulatory regime where the regulator itself is unfamiliar and perhaps also lacking in the necessary expertise to get a new type of financial transaction over the line.
There have been numerous calls for the UK ILS regime to be swift and efficient, but also scepticism that it could ever be as fast as the established offshore ILS domiciles.
But Peignet noted that with the ground-work of a first transaction now completed, it should get easier to issue cat bonds in the UK from here.
“I think next time, I am very confident that yes, we will benefit. We and others will benefit from the fact that now we have something. There is the right understanding from the authorities in the marketplace, it was not easy, it was very hard work for the team. But we were very satisfied with the outcome,” he said.
“But, most importantly, we were clear on our deadlines from the beginning and the deadlines were met.”
SCOR’s CEO Dennis Kessler also commented on the issuance of the first UK domiciled catastrophe bond that the reinsurer sponsored, saying that the regulator coped well with this demanding task.
“The UK regulators did a very good. It was placed extremely rapidly at a very good price,” said Kessler.