Broker teams up with UnipolSai
Willis Capital Markets & Advisory and UnipolSai Assicurazioni have launched the first indemnity-trigger catastrophe bond primarily for Italian earthquake risk, Azzuro Re.
High investor interest backs the transaction. More than twenty investors supported the deal, which was oversubscribed and upsized from the initial €150m.
Italian financial services firm UnipolSai is one of the largest buyers of Italian earthquake cover, with €200m of fully-collateralised protection against earthquake risk and ensuing perils in Italy and neighbouring countries for three-and-a half years.
Azzuro Re was structured and placed by Willis Capital Markets in collaboration with Willis Group’s reinsurance division, Willis Re.
Like some existing catastrophe bonds, Azzuro Re features an indemnity trigger on a per-occurrence basis. A Willis statement said Azzuro mirrors traditional reinsurance terms to ensure integration within the overall property catastrophe reinsurance program of UnipolSai.
Yet Azzuro Re is unique in covering Italian earthquake risk and is also the year’s first Europe-focused catastrophe bond.
Sponsored by UnipolSai, Azzuro Re notes pay an annual risk spread of 2.15%, a record low for a first-time European primary insurance catastrophe bond sponsor of first event indemnity-trigger principal-at-risk notes.
On the deal, Willis Re International chief executive Tony Melia said: “Azzurro Re is a clear demonstration of the continued trend for diversified reinsurance buying, with buyers restructuring their reinsurance programs to better integrate ILS capacity, ultimately to improve performance and efficiency gains for the benefit of policyholders as well as shareholders.”
Noting the current low penetration rate of earthquake insurance in Italy, UnipolSai head of reinsurance Marco Sordoni said his company had ”proactively sponsored this transaction in anticipation of our potential growth in exposure”.
He added: ”We value the reduction in post-event counterparty risk from the fully collateralised cover and we continue to work on other innovative risk transfer solutions as we to look to develop our international capabilities.”