Generali has entered into a collateralised multi-year reinsurance agreement with Lion III Re DAC, an Irish designated activity company, that provides cover for losses from windstorms in Europe and earthquakes in Italy over a four year period.
As a result, Lion III Re DAC has issued a single tranche of notes in an amount of €200 million to fund its obligations under the reinsurance agreement, and the notes have been placed with capital markets investors in a Rule 144A offering.
The demand from capital market investors has allowed the protection to be provided to Generali at a premium of 3.50% per annum on the €200 million cover under the reinsurance agreement, which Lion III Re DAC will in turn pay to investors as a component of the interest paid on the notes.
According to the terms of the offering all or a portion of the interest amount and the principal payable in respect of the notes will be reduced in case of losses sustained by Generali Group due to earthquakes in Italy or windstorms in Europe exceeding a predefined threshold for each peril.
Lion III Re DAC transaction is described as the first catastrophe bond embedding green features in accordance with the Generali Green ILS Framework.
GC Securities, a division of MMC Securities LLC, acted as a Sole Structurer of the transaction and Joint Bookrunner, Barclays acted as Sole Green Structuring Advisor and Joint Bookrunner, Natixis acted as a Sole Green Coordinator and Joint Bookrunner.
The Generali Group Chief Insurance & Investment Officer, Sandro Panizza, stated, “Generali has proven once more its confidence and proximity to investors as well to traditional reinsurers.
“This new issuance allows Generali to further optimize the purchase of reinsurance protection, leveraging on the trust of both the traditional reinsurance and the ILS markets in the quality of its portfolio.
“Investor interest for the notes issued by Lion III Re DAC allowed Generali to achieve a better risk return trade-off for the overall reinsurance programme.”