Italian and global insurance giant Assicurazioni Generali S.p.A.has now successfully secured a renewal for its green catastrophe bond, with the new EUR 200 million transaction finalised at its target size and with pricing of the two tranches of notes at either end of their initial ranges, Artemis can report.Generali returned to the catastrophe bond market at the beginning of May, with an initial target to secure EUR 200 million of multi-year and fully collateralized reinsurance to protect it against losses from windstorms affecting Europe and earthquakes affecting Italy.The insurer sponsored its first what it termed green catastrophe bond, back in 2021.

That €200 million transaction provided reinsurance against certain losses from European windstorms and Italian earthquakes across a multi-year term, but matures this June.Hence this new Lion Re DAC 2025-1 cat bond looks like a renewal of the previous deal.Generali , and in 2024 the green ILS framework was updated to incorporate new features and expand its scope, resulting in a Green, Social and Sustainability Insurance-linked Securities Framework.

Under this framework, Generali can free up capital thanks to the cat bond which can be put to work in sustainable investment.Now, with the Lion Re DAC 2025-1 cat bond priced, Generali has secured its targeted EUR 200 million renewal and the deal will move towards settlement later this month.Now, Lion Re DAC will issue two tranches of Series 2025-1 notes that will provide Generali with a four year source of collateralized reinsurance protection, on an indemnity trigger and per-occurrence basis, against losses from windstorms across Europe and earthquakes in Italy.

A EUR 125 million Class A tranche of Series 2025-1 notes will provide Generali with both European windstorm and Italy quake protection.They come with an initial expected loss of 3% and were first offered to cat bond investors with price guidance in a range from a spread of 5.5% to 6.25%.We now understand the Class A notes have been priced at the low-end of that guidance, for a risk interest spread of 5.5% to be paid to investors.

A EUR 75 million Class B tranche of notes will provide Generali with only Italy earthquake protection.They come with an initial expected loss of 2.33% and were first offered to cat bond investors with price guidance in a range from a spread of 5.25% to 6%.We’re told the risk interest spread for the Class B notes has now been finalised at 6%, so at the upper-end of the initial guidance range.

As a result, Generali has secured its targeted collateralized reinsurance coverage from the catastrophe bond market with pricing within guidance, albeit at opposite ends of the respective initial ranges on offer.As a comparison, the soon to mature Lion III Re cat bond featured a single tranche of notes exposed to both of the perils and came with an initial expected loss of 2.99% and priced to pay investors a risk interest spread of 3.5%.Under the terms of Generali’s Green, Social and Sustainability Insurance-linked Securities Framework, this new Lion Re DAC catastrophe bond will free up an amount of its own capital, equal to the cat bonds limit.

This can then be allocated to eligible projects by the company, while the collateral will be invested in EBRD notes.The insurer will also report on the allocation of the freed up capital and the project benefits derived from that, we understand.It’s great to see Generali continuing to push the boundaries of ESG within the catastrophe bond market, by following its framework and seeking to deliver broader sustainable benefits, while also deriving its own benefits from the capital markets backed reinsurance the cat bond will provide.

You can read all about this new catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.