7 hours ago
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Artemis can report that GAREAT, the French co-reinsurance pool for terrorism insurance risks, has successfully secured the targeted €100 million of terrorism reinsurance from its debut Athéna I Reinsurance DAC catastrophe bond, with the notes priced within the initial guidance that was offered.
French terrorism risk insurance pool GAREAT, or Gestion de l’Assurance et de la Réassurance des Risques Attentats et actes de Terrorisme, had been expected to enter the cat bond market this year, and this Athéna I Reinsurance DAC terrorism catastrophe bond came to light early in November.
Under the current GAREAT pool structure of its reinsurance, members cover the first €500 million of any terror attack under the scheme, while after that pooled excess-of-loss reinsurance covers losses up to €2.8 billion, beyond which CCR provides coverage backed by state guarantee.
GAREAT covers terrorism consequential property risks, material damage and business interruption under the scheme and through its resources, which include the private market reinsurance arrangements it purchases.
This Athéna I Reinsurance DAC terrorism catastrophe bond will cover GAREAT for physical property damage from terrorism events in France and its territories, sharing a €200 million layer of the risks ceded through the reinsurance tower.
When first reported on, we learned that the target size for this first cat bond issuance for GAREAT was to secure €100 million in cover, through the notes to be issued by Athéna I Reinsurance DAC, an Irish domiciled designated activity company.
We’re now told by sources that the notes have been successfully priced and the issuance size remains unchanged, with GAREAT securing that €100 million of targeted protection from the capital markets.
The now confirmed to be €100 million of notes will provide GAREAT indemnity reinsurance protection on an annual aggregate basis across three annual risk periods, from January 1st 2025 to the end of 2028.
The terrorism reinsurance protection would attach at €500 million in losses to GAREAT, so occupying a 50% share of the lower layer of its reinsurance arrangements, covering losses up to €700 million.
The notes being issued by Athéna I Reinsurance DAC will have an initial attachment probability of 1.14% and an initial expected loss of 0.98%.
They were first offered to cat bond funds and investors with spread price guidance in a range from 4.75% to 5.5%.
Sources have told us that the final pricing was fixed at 5.25%, so within the upper-half of the initial guidance range that was offered to investors.
As we said in our initial report on the deal, this Athéna I Reinsurance DAC cat bond for GAREAT is just the third terror cat bond to ever come to market, the previous two being the Baltic transactions issued for UK terror reinsurer Pool Re.
It’s encouraging to see this first cat bond for GAREAT successfully priced and set to complete in early December, showing that appetite remains in the catastrophe bond market for terrorism risks.
This sends a positive signal for the aforementioned Pool Re, as that terrorism reinsurer’s currently in-force Baltic PCC 2022 cat bond is scheduled to mature in early March 2025.
You can read all about this Athéna I Reinsurance DAC terrorism catastrophe bond and every cat bond ever issued in our extensive Artemis Deal Directory.
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