SCOR’s new Atlas Capital Re cat bond “integrates ESG considerations”
France headquartered global reinsurance firm SCOR said this morning that its successfully issued $240 million Atlas Capital Reinsurance 2022 DAC (Series 2022-1) catastrophe bond has environmental, social and governance (ESG) considerations integrated into it.
As we’ve been reporting, SCOR came to market with its latest catastrophe bond with a $150 million target earlier in May.
With SCOR’s appetite for retrocession greater than the initial target, we then explained that the size target for the new Atlas Capital cat bond was lifted to between $200 million and $250 million.
In the end, we reported that SCOR settled the catastrophe bond at $240 million in size, so just short of the upper-end target and well up on its initial launch size.
The cat bonds coupon rose considerably during the marketing process, having begun with a guidance mid-point of 8.5% and eventually settled to pay investors a 9.5% coupon, reflective of broader catastrophe bond spread widening and reinsurance market hardening.
This morning the reinsurer said that the new catastrophe bond “integrates ESG related considerations to support investors’ due diligence.”
Here, SCOR signed up Natixis as sustainability advisor, as well as its more typical joint-bookrunner roll, and provided investors looking at the cat bond with broad information on its own ESG progress and how ESG is embedded into its underwriting considerations.
This supportive information certainly won’t have swung the deal, but we expect ESG disclosures to become a more regular component of catastrophe bond investment submission packages going forwards, to match investor appetite for such disclosure.
The Atlas Capital Reinsurance 2022 DAC catastrophe bond will provide SCOR $240 million of multi-year retrocessional reinsurance, on an aggregate, index-based trigger, running to the end of May 2025.
The retrocession will protect SCOR against certain losses from named storms in the U.S. and earthquakes in the U.S. and Canada, as well as European windstorms.
It is the second cat bond to be approved in Ireland under Solvency II, after SCOR’s previous cat bond deal.
SCOR said the cat bond is part of its “efficient capital shield” and “a strategic cornerstone of the SCOR Group,” one of the “full array of capital market solutions” the reinsurance company utilises.
Jean-Paul Conoscente, CEO of SCOR P&C, commented, “SCOR is pleased to renew its commitment to the ILS market, securing multi-year protection in a challenging market environment. Issuing cat bonds is an integral part of SCOR’s capital protection, of which Atlas 2022 is the latest example. The positive market reaction, securing increased capacity, is a tribute to SCOR’s commitment to the ILS market and more broadly to sustainable underwriting. We are grateful to the Irish regulatory bodies for their support and responsiveness during this transaction.”