Covéa Group, the French mutual insurer, continues to target €200 million in fully-collateralized reinsurance protection with its new Hexagon IV Re Ltd. (Series 2025-1) catastrophe bond issuance, but the price guidance for each of the two tranches of notes on offer has now been lowered, Artemis understands.
The insurer is looking to expand the capital markets backed reinsurance it gets through the cat bond market through the inclusion of an aggregate tranche of notes with this deal, as well as expanded protection to cover windstorm losses as in previous deals, as well as hail and protection for certain other windstorm related perils.
We’re told that Covéa’s target remains to secure €200 million in fully-collateralized reinsurance, but the insurer is aiming to source that protection at a more cost-effective rate as the price guidance range for the spread for both tranches of notes has now been lowered.
Read about all of Covéa Group’s catastrophe bonds in our extensive Deal Directory.
So, Hexagon IV Re Ltd. is still set to issue two tranches of Series 2025-1 cat bond notes that will provide €200 million of reinsurance to protect Covéa and its mutual insurers with against losses from windstorms, hail and certain other perils across France, Monaco and Andorra.
€150 million of Class A notes will provide four calendar years of indemnity per-occurrence protection, while €50 million of Class B notes will provide indemnity annual aggregate protection over a two calendar year term.
The Class A per-occurrence notes come with an initial expected loss of 2.97% and were initially offered to cat bond investors with price guidance for a spread of between 5.5% and 6%. We’re now told this price guidance has been lowered to a revised range of between 5% and 5.5%.
The Class B aggregate notes come with an initial expected loss of 1.16% and these notes were first offered to cat bond investors with price guidance for a spread of between 6.5% and 7%. We’re now told the guidance for these notes has also fallen, to a new spread price range of between 6% and 6.5%.
We are also told that the expected settlement date for this Hexagon IV Re Series 2025-1 catastrophe bond issuance has been moved back slightly into November, which will allow a little more time for the final pricing to be reached.
Covéa Group looks set to benefit from the strong execution being offered by the cat bond market, with a chance to secure its fifth sponsorship at pricing at or below the initial guidance, reflecting the continued strong levels of investor demand and well-capitalised market conditions.
You can read all about this new Hexagon IV Re Ltd. (Series 2025-1) catastrophe bond from Covea Group and every other cat bond transaction issued in our Deal Directory.
