CCR Re has announced that it has set up the first reinsurance sidecar vehicle to be domiciled in France, called 157 Re.
157 Re will assume a 25% quota share of CCR Re’s worldwide property cat portfolio to provide the reinsurer with fully collateralised capacity to support its organic growth.
CCR Re added that the insurance-linked securities (ILS) instrument will also provide it with Solvency II regulatory credit and give it access to a new competitive investor base.
The sidecar is due to incept on April 1, 2019 with the expectation that it will recur annually to support CCR Re’s growth on property cat business.
157 Re is the first ever ILS instrument governed by French law and takes the form of a mutual securitisation fund, which has historically been used for financial assets securitisation only.
Willis Towers Watson Securities acted as structuring agent for the transaction, with France Titrisation as the management company, BNP Paribas Securities Services as custodian, Linklaters as transaction counsel, and Clyde & Co serving as counsel to CCR Re on the reinsurance matters.
CCR Re claimed that the transaction would “pave the way for the development of an ILS market in Paris,” and said that it could easily be duplicated to cover other types of insurance risks and develop other types of ILS instruments.
“By creating and sponsoring 157 Re, the first ever French insurance linked securities instrument, CCR Re’s teams have confirmed their innovative skills and mindset, as well as their commitment to promote the Paris financial market place attractiveness and development,” said Bertrand Labilloy, Chairman & CEO of CCR Re.
“I would also like to express my sincere appreciation to our advisors for their support, agility, and decisive contribution to the success of this transaction which is strategic for CCR Re,” he continued.
“We have been impressed with the commitment and command displayed by all the parties involved throughout the structuring and set up process.”
157 Re has been licensed by the French supervisory authority, Autorité de Contrôle Prudentiel et de Résolution, and tax authorities have also provided formal guidance in respect of the tax treatment of the operation for the investors.
Alkis Tsimaratos, Managing Director for EMEA W/S at Willis Re, also commented on the announcement: “We’re delighted to have supported CCR Re in its strategic growth objectives through this innovative sidecar, which is the first ILS instrument to use the French FCT regime.”
“This was achieved by bringing together the combined knowledge and expertise of our embedded ILS and reinsurance teams,” he added. “Our unique client focus and ILS offering further affirms our privileged position in the European ILS market.”
Quentin Perrot, Senior Vice-President at Willis Towers Watson Securities, further stated: “157 Re is testament of the great professionalism of the CCR Re team at all levels of the transaction and the innovative push from the top management.”
“For this first transaction to use the French FCT regime covering insurance risks, we have been impressed with the commitment and responsiveness displayed by all the parties involved throughout the structuring and placement process,” he explained.
“This makes the French FCT regime highly attractive, in particular for European based cedants who can benefit from the Solvency II regulatory credit for their ILS transactions”.