An Italian insurance company and a division of Willis Group Holdings plc completed what is billed as the insurance/reinsurance industry’s first indemnity-trigger catastrophe bond for Italian earthquake Risk.
UnipolSai Assicurazioni S.p.A. (UnipolSai), a multi-business Italian insurance company of the Unipol Group and Willis Capital Markets & Advisory (WCMA) part of Willis Group Holdings plc, teamed on the transaction for Italian earthquake risk via Azzurro Re I Limited (Azzurro Re).
UnipolSai sponsored Azzurro Re.
According to the announcement, UnipolSai, one of the largest buyers of Italian earthquake cover, gets €200 million [$222.76 million] of fully collateralized protection against earthquake risk and ensuing perils in Italy and neighboring countries for three-and-a half years.
Azzurro Re is the first catastrophe bond for UnipolSai. It also marks the first catastrophe bond exposed to European risk issued in 2015.” Investors responded well, as the initial €150 million [$167.16 million] capitalization was oversubscribed and was increased to the present figure.
The notes will pay an annual risk spread of 2.15 percent, a record low for a first time European primary insurance catastrophe bond sponsor of first event indemnity-trigger principal-at-risk notes, according to the announcement.
UnipolSai’s Head of Reinsurance Marco Sordoni said in prepared remarks that Azzurro Re “is an important transaction for UnipolSai and supports our long-term development strategy across the international markets as well as in Italy.”
Sordoni added that “with the current low penetration rate of earthquake insurance in Italy and wider international markets, we have proactively sponsored this transaction in anticipation of our potential growth in exposure.”
Tony Melia, CEO of Willis Re International, described Azzurro Re as “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.”
William Dubinsky, WCMA’s Managing Director and Head of ILS, added in a statement that he sees the transaction as showing “the continued investor appetite for catastrophe risk and highlights the strong interest for investment in diversifying perils.”
Sources: UnipolSai and Willis Re