Italian headquartered insurer Generali has returned to the insurance-linked securities (ILS) market sponsoring a catastrophe bond issued by Lion Re DAC that comprises two classes of notes for a total of €200 million covering windstorms in Europe and earthquakes in Italy.
The Series 2025-1 Notes have been placed with capital markets investors in a Rule 144A offering.
More specifically, Lion Re DAC has issued €125 million of class A notes under the Series 2025-1 Notes (the “Class A Notes”) providing combined coverage for windstorms in Europe and earthquakes in Italy; and €75 million of class B notes under the Series 2025-1 Notes (the “Class B Notes”) providing coverage only for earthquakes in Italy.
Generali secured reinsurance protection under the Lion Re DAC issuance, thanks to growing capital markets investor demand.
The Class A Notes were priced with an initial risk interest spread of 5.50% per annum, while the Class B Notes were priced at 6.00% per annum.
These premiums will be paid by Lion Re DAC to the investors as part of the interest on the Series 2025-1 Notes.
According to the terms of the offer, all or a portion of the interest amount and the principal payable in respect of the Series 2025-1 Notes will be reduced if the Generali Group incurs losses from Italian earthquakes or European windstorms that surpass specific predefined thresholds for each event.
The insurer highlighted the cat bond’s have specific Environmental, Social, and Governance (ESG) features, becoming the second cat bond from the sponsor to have specific green features, which follows Generali’s green, social & sustainable ILS framework.
Marco Sesana, Generali Group General Manager, said: “Our new catastrophe bond reaffirms Generali’s strong relationship with ILS investors, which started in 2014 with the issuance of our first catastrophe bond. ILS capital is completely integrated and complementary to our traditional reinsurance strategy.
“This first transaction, under the newly shelf programme, reflects the continued trust in the quality of our portfolio and our disciplined approach to risk management. Furthermore, it is fully aligned to our Lifetime Partner 2027 strategy, advancing our sustainability value proposition, thanks to the ESG structure at the core of this issuance.”
Cristiano Borean, Generali Group CFO, commented: “Generali’s well-established presence in the ILS capital market is once again confirmed by this fourth successful catastrophe bond issuance, with a further enhancement in terms of structural efficiency, optimisation and flexibility, thanks to the ILS shelf programme.
“As a responsible insurer and investor, this issuance with its unique and distinctive ESG features, once again demonstrates our sustainability-rooted excellence by integrating ESG principles into alternative risk transfer solutions, while also effectively embedding ILS instruments into our capital management strategy.”
Aon Securities and GC Securities, a division of MMC Securities LLC, acted as Joint Structuring Agents and Joint Bookrunners for the transaction.
This is Generali’s first cat bond since 2021, and you can read all about this deal and hundreds of others on the Artemis Deal Directory.
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