Covéa sponsors €200m Hexagon III Re cat bond in Singapore

Covéa sponsors €200m Hexagon III Re cat bond in Singapore

Covéa Group, the French mutual insurance society, is back in the disaster bond market with a brand-new Hexagon III Re Pte. Ltd. (Series 2021-1) deal targeting EUR200 million of reinsurance from the capital markets to cover losses from a few of its peak dangers and with the deal being provided out of Singapore.This is Covéas third see to the disaster bond market, having sponsored two Hexagon feline bonds in 2017 and 2019, both of which were issued out of Ireland and were mainly concentrated on securing windstorm reinsurance security for the insurance group.
Now, the mutual insurance provider has returned with a brand-new multi-peril plan through which it seeks a minimum of EUR200 million of collateralised reinsurance to cover losses from windstorms, hail storms and certain other natural hazard events.
The covered location for this feline bond transaction includes mainland France, Monaco and Andorra, however not the overseas areas of France.
Covéa Group has opted to shift the cat bond issuance domicile to Singapore for its 3rd catastrophe bond, which will see the shared insurance company benefiting from the nations ILS grant program that will pay a part of the upfront issuance costs.
Hexagon III Re Pte. Ltd. has been registered as a special purpose reinsurance vehicle in Singapore and it will seek to provide two tranches of Series 2021-1 cat bond notes.
The two tranches of notes are slated to protect a minimum of a EUR200 million 4 year capital markets-backed source of reinsurance for Covea, with one tranche focused solely on windstorm protection in France, Monaco and Andorra and the other including hail and other natural danger events, such as snowfall, earthquake, frost, ice, flooding, volcanic dangers, avalanches and mudslides.
Both tranches will offer Covea with indemnity reinsurance security on a per-occurrence basis and will come on-risk from the start of 2022, with cover going through to the end of 2025, we comprehend.
Hannover Re beings in the middle of this transaction as delivering reinsurer, to help Covea in interfacing with the capital markets.
The two tranches of Series 2021-1 notes released by Hexagon III Re Pte. Ltd. will be offered to disaster bond investors and the earnings used to collateralise retrocessional reinsurance contracts between the issuer and Hannover Re, which will in turn participate in reinsurance arrangements with Covea companiess, that include 3 named insurers MMA IARD SA, MAAF Assurances SA and GMF Assurances along with other entities within the Covéa Group.
A EUR100 million Class A tranche of notes will offer windstorm, hail storm and other natural hazard occasion cover, attaching at EUR450 million of losses and covering a EUR400 million layer of Coveas reinsurance tower, so has space to grow, were told.
The Class A notes will have an initial predicted loss of 1.83% and are said to be being used to financiers with coupon assistance in a range from 2.5% to 3%.
A EUR100 million Class B tranche of notes just cover windstorm risks and attach lower down at EUR50 million, so are far riskier, and cover simply a EUR100 million layer, so wont upsize, we comprehend.
This Class B tranche of notes have an 8.05% initial predicted loss and are being offered with cost assistance of 9% to 9.5%, our sources stated.
These are very low multiples-at-market, as you can see, showing rates of reinsurance for these dangers which often tends to be low in Europe. The Class B notes appear to provide extremely little in the method of spread above predicted loss, so it will be fascinating to see how these are gotten and where prices settles.
Its motivating to see Covéa continuing with its use of disaster bonds, particularly as the business is as soon as again set to get global reinsurer PartnerRe which would see it with a considerably expanded hazard footprint around the globe, so might result in more cat bond concerns in time.
We understand issuance is anticipated to complete later this month and you can check out all about this new Hexagon III Re Pte. Ltd. (Series 2021-1) catastrophe bond from Covea Group and every other cat bond transaction in our Deal Directory.

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!