The transaction was executed in collaboration with Willis Towers Watson’s reinsurance business, Willis Re.
Hexagon Reinsurance DAC (“Hexagon”), which settled 15 December, provides Covea with two €45 million tranches of fully collateralized protection against windstorm risk in France for a four-year period. The structure features an indemnity trigger on an annual aggregate basis with terms mirroring the traditional reinsurance placement, to ensure effective integration within the overall property catastrophe reinsurance program.
Bill Dubinsky, Head of ILS at Willis Towers Watson Securities, said: “We are proud to have supported Covea in its inaugural catastrophe bond transaction. Investors were eager to support the transaction. Hexagon diversifies Covea’s sources of reinsurance capacity with competitive pricing.
“This is a unique transaction as it is the first time a European catastrophe bond has supported capacity at the bottom of a traditional reinsurance program, as well as the first time a European indemnity-trigger catastrophe bond was placed on an annual aggregate basis.”
Alkis Tsimaratos, Managing Director of Willis Re EMEA W/S said: “We are delighted at the multiple results achieved in this transaction. In addition to opening up a new source of capital for Covea’s reinsurance strategy, Hexagon offers a stable multiyear commitment at attractive terms, in the middle of a challenging renewal market, marked by future price uncertainties. The transaction also demonstrates that attachment levels usually reserved for traditional structures in Europe are equally attracting catastrophe bond investors.
“Once again, the combined expertise of Willis Re and Willis Tower Watson Securities was a key differentiator in providing leading advice to our client on the design and execution of their risk transfer strategy.”
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