Crédit Agricole’s Pacifica seeks debut €150m Taranis Re cat bond
French insurance group Crédit Agricole has entered the catastrophe bond market for the first time and with this debut Taranis Reinsurance DAC 2023 issuance the company is seeking €150 million or greater in capital market investor backed reinsurance against losses from regional perils.
The cedent to this catastrophe bond is Pacifica, which is a 100% owned entity that sits under Crédit Agricole Assurance within the group, we understand.
Pacifica is seeking four years of collateralised reinsurance protection against losses from windstorms and hail storm events affecting France, Monaco and Andorra, to run until the end of 2027, we understand.
Taranis Reinsurance DAC, an Irish special purpose company, has been formed to issue two tranches of catastrophe bond notes that will be sold to investors and the proceeds be used to collaterlise the reinsurance agreements with Crédit Agricole’s Pacifica.
There is a target for at least €150 million in both indemnity and annual aggregate reinsurance on a per-occurrence basis, across the two tranches of cat bond notes that are on offer, we are told.
A €100 million Class A tranche of notes will cover Pacific for losses from windstorms and hailstorms across the covered area on a per-occurrence basis, where as a €50 million Class B tranche will only cover windstorm losses and on an annual aggregate and second event basis, we understand.
The Class A per-occurrence notes would attach at €300 million of losses to Pacifica, covering a layer to €600 million, giving them an initial attachment probability of 5.77%, an initial expected loss of 3.53% and they are being offered to cat bond investors with spread price guidance in a range from 7% to 7.5%.
The Class B, aggregate and second event notes, would attach at €90 million of losses, covering a layer to €180 million, but have a relatively high deductible of €75 million, giving them an initial attachment probability of 2.45%, an initial expected loss of 1.5% and they are being offered to cat bond investors with spread price guidance in a range from 5% to 5.75%.
It’s interesting to see the second event aggregate tranche of notes being issued, as this is a protection that could prove popular with traditional aggregate reinsurance less readily available today. It’s also understandable that the aggregate tranche does not cover hailstorms, given investors aversion to frequency in secondary peril loss events.
It’s good to see another first time sponsor in the cat bond market this year, as the issuance pipeline continues to build up for what now looks likely to be a very busy few weeks ahead.
We’ll update you as this new Taranis Reinsurance DAC 2023 catastrophe bond proceeds to market and you can read all about this and more than 950 other cat bond transactions in the Artemis Deal Directory.
