SCOR CFO highlights “efficiency gains made” reusing Irish cat bond issuer

In commenting on the recent successful issuance of a $175 million Atlas Capital DAC (Series 2024-1) catastrophe bond, the second from that Irish special purpose vehicle, SCOR’s CFO and Deputy CEO François de Varenne has highlighted the “efficiency gains made.”

SCOR came to market with its second catastrophe bond under the Atlas Capital DAC vehicle in recent weeks and, as we reported, the issuance was upsized by 40% thanks to strong investor demand to secure the French reinsurance company $175 million of retrocessional protection.

SCOR first used the Atlas Capital DAC vehicle, an Ireland domiciled designated activity company, for its 2023 cat bond issuance, which was a $75 million deal.

This time around, the reinsurer has secured far more in protection, but with a 2020 Atlas cat bond issuance of $200 million in size soon maturing, the company has not fully replaced that, but said today the size of the new deal is in-line with its protection and risk appetite needs.

SCOR has been a regular user of catastrophe bonds within its retrocessional reinsurance program since its first Atlas transaction in the year 2000, alongside other forms of traditional and capital markets capacity.

Details on every cat bond SCOR has sponsored can be found in our Deal Directory.

SCOR acknowledged the “high investor demand” for its new cat bond today, also saying that the benefits of the Irish domiciled vehicle were evident in the issuance this year.

The reinsurer explained, “Atlas Capital DAC Series 2024-1 is an aggregate, index-based trigger cat bond issued by Atlas Capital DAC, a multi-arrangement special purpose vehicle approved in Ireland under Solvency II. This vehicle was created in 2023 for the Series 2023-1 cat bond issuance, and it may be utilized by the Group to sponsor cat bonds covering various perils in both L&H and P&C. The benefits of this vehicle were visible this year, as it allowed for a faster and more cost-effective issuance process.”

François de Varenne, Group CFO and Deputy CEO of SCOR, further commented, “SCOR is pleased to sponsor a new cat bond this year, securing multi-year protection against peak natural perils from the ILS market. We are delighted by the strong investor demand, as cat bonds remain an integral part of SCOR’s capital protection under the Forward 2026 strategic plan. We are also very pleased with the efficiency gains made by reusing Atlas Capital DAC for a second year.”

It’s worth noting here that SCOR demonstrated its flexibility in its latest visit to the cat bond market, as the new Atlas Capital deal was subject to an adjustment to certain risk metrics during the issuance process, to match the transaction to investor appetites and keep pricing within SCOR’s targeted bounds.

Still, the pricing for the new Atlas Capital DAC 2024-1 cat bond came in slightly above initial guidance, but much less than it would have been had SCOR not responded to investor feedback and adjusted certain deal features.

That shows a sophisticated buyer with an appetite for coverage, but not at any cost, and with a large enough book to be able to adjust where the catastrophe bond sits in its retro tower to keep the coverage cost-effective and still functional, in terms of protection.

The re-use of the Irish structure is encouraging for that countries ambitions to secure more catastrophe bond issuance, as a cat bond domicile with a Solvency II regulatory environment.

You can read all about this Atlas Capital DAC (Series 2024-1) catastrophe bond from SCOR and every other cat bond transaction in the Artemis Deal Directory.