Covéa has issued cat bonds to cover itself against windstorms and other weather events particularly in mainland France.
These issues, carried out in 2018 and 2019, earned nominations at the Trading Risks Awards for both "Re(insurer)/Sponsor of the year" and "Non-Life transaction of the year".
A first issue in 2018
In 2018, Covéa has settled a €90 million reinsurance cover from Irish law company Hexagon Reinsurance DAC, known as “Hexagon Re”, providing the Group’s French property and casualty insurance companies a cover against windstorm risk, in mainland France in particular, from 1 January 2018.
This fully collateralised hedge is “aggregate” in nature, meaning that it is triggered when the cumulative cost for Covéa of storms occurring during a given calendar year exceeds set thresholds.
To this end, under Rule 144A of the US Securities Act, Hexagon Re issued two classes of catastrophe bonds maturing in January 2022, for an amount of €45 million each and covering different risk levels.
A second issue in 2019
In 2019, Covéa has taken out reinsurance protection of €120 million euros with the Irish company Hexagon II Reinsurance DAC, known as “Hexagon II Re”.
In order to achieve this, Hexagon II Re issued a tranche of catastrophe bonds that matures in January 2024, under Rule 144A of the US Securities Act. This issue is intended to cover the French non-life insurance companies within Covéa group against the risk of storms and other weather events, in particular those affecting metropolitan France from 1 January 2020 onwards.
The cover, which is fully collateralised, works on a per event basis, which means that the cover is triggered when the cost of a weather event covered by the cat bond exceeds a specific threshold.
With Hexagon II Re, Covéa strengthens its presence in the catastrophe bond market outside the US.