Covéa Group, the French mutual insurer, has returned to the catastrophe bond market for its fifth cat bond deal, seeking €200 million or greater in fully-collateralized reinsurance protection with this Hexagon IV Re Ltd. (Series 2025-1) issuance targeting expanded coverage in both occurrence and aggregate formats, Artemis understands.
Covéa Group had previously sponsored its first two catastrophe bonds out of Ireland, a third in 2021 that saw the issuer domiciled in Singapore and then its most recent in 2023 was issued out of Bermuda using a special purpose insurer (SPI) named Hexagon Re IV Ltd.
That last Hexagon IV Re 2023-1 cat bond provides Covéa Group with €145 million in multi-year catastrophe reinsurance running to the end of 2027, remaining in-force. So the insurer continues to have capital markets backed reinsurance against windstorm losses in France, Monaco and Andorra with that deal.
It’s encouraging to see Covéa return in 2025 with a new cat bond in the Hexagon series of deals that looks to expand the capital markets backed reinsurance through the inclusion of an aggregate tranche of notes and expanded protection to cover windstorm losses as before, as well as hail and protection for other windstorm related perils, we are told.
Read about all of Covéa Group’s catastrophe bonds in our extensive Deal Directory.
Hexagon IV Re Ltd. is set to issue two tranches of Series 2025-1 cat bond notes that will be sold to insurance-linked securities (ILS) investors and the proceeds used to collateralize a reinsurance agreement between the issuer and Covéa Group entities.
At least €200 million of reinsurance is the target with this new Hexagon Re IV 2025-1 cat bond, to provide Covéa and its mutual insurers with fully-collateralized cover against losses from windstorms, hail and certain other perils across France, Monaco and Andorra.
One tranche of indemnity per-occurrence notes will provide the insurer with four calendar years of protection, while a second tranche will provide indemnity annual aggregate protection over a two calendar year term, we understand. The aggregate notes also cover a slightly narrower range of perils.
A targeted €150 million Class A tranche of notes will provide indemnity triggered per-occurrence protection for losses from windstorms, hail and other perils. Those other perils include certain winter storm related impacts such as snow-linked, we are told. The term of coverage will run from the start of 2026 until the end of 2029, so four years of coverage.
The Class A notes protection would attach at €625 million of losses, covering a share of losses to €1.025 billion, giving them an initial attachment probability of 4.28%, an initial expected loss of 2.97% and these notes are being offered to cat bond investors with price guidance for a spread of between 5.5% and 6%, sources said.
A targeted €50 million Class B tranche of notes will provide indemnity triggered annual aggregate reinsurance protection for losses from windstorms and hail events (so not including the other perils categories), we understand. The term of coverage for these aggregate notes will run from the start of 2026 until the end of 2027, so two years of coverage.
We’re told that the annual aggregate coverage terms feature a €200 million event deductible and €50 million cap per qualifying event.
The Class A notes protection would attach at €50 million of losses, covering a share of losses to €100 million, giving them an initial attachment probability of 1.47%, an initial expected loss of 1.16% and these notes are being offered to cat bond investors with price guidance for a spread of between 6.5% and 7%, sources said.
Given the event deductible and cap terms, it would appear these notes could only face principal losses after a second event qualified.
Being European catastrophe risk coverage focused this new Hexagon IV Re 2025-1 catastrophe bond will offer investors some diversification, both in region and peril terms.
It’s good to see Covéa Group back and looking to expand on its catastrophe bond backed capital markets reinsurance protection.
It’s worth also noting that we reported back in July 2024 that the junior €53 million Hexagon III Re Pte. Ltd. (Series 2021-1) Class B tranche of notes from Covéa Group’s 2021 catastrophe bond issuance were marked down on the potential for losses from November 2023’s European windstorm Ciarán. Since that date, the secondary market price of the notes have recovered somewhat, but they remain discounted by varying degrees on the majority of pricing sheets at this time, we are told.
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.
