Cost-effective alternative to retro intended as ‘last resort’ nat cat protection
SCOR has signed a new natural catastrophe financial coverage facility in the form of a contingent capital equity line with UBS. The new facility – providing cover of €75m ($95m) – is an extension of its existing 2010 contingent capital equity line.
With the new arrangement SCOR has extended its existing contingent capital equity line from €75m to €150m.
The contingent capital is considered as last-resort protection. The cover is designed to be triggered after SCOR’s traditional retrocession and insurance-linked securities (ILS) solutions.
The issuance of new shares under the extended contingent capital equity line will only be triggered when SCOR has experienced total annual aggregated losses from natural catastrophes above a certain predetermined threshold in a given calendar year.
In addition, this extension of its contingent capital solution allows the SCOR group to further diversify its means of protection, offering a very cost-effective alternative to traditional retro and ILS.
In the absence of the occurrence of any triggering event, no shares will be issued under the facility. The facility may therefore reach its term without any dilutive impact for the shareholders.
Under the extended facility, the eligible worldwide natural catastrophe events under the transaction include the following:
SCOR has signed a new natural catastrophe financial coverage facility in the form of a contingent capital equity line with UBS. The new facility – providing cover of €75m ($95m) – is an extension of its existing 2010 contingent capital equity line.
With the new arrangement SCOR has extended its existing contingent capital equity line from €75m to €150m.
The contingent capital is considered as last-resort protection. The cover is designed to be triggered after SCOR’s traditional retrocession and insurance-linked securities (ILS) solutions.
The issuance of new shares under the extended contingent capital equity line will only be triggered when SCOR has experienced total annual aggregated losses from natural catastrophes above a certain predetermined threshold in a given calendar year.
In addition, this extension of its contingent capital solution allows the SCOR group to further diversify its means of protection, offering a very cost-effective alternative to traditional retro and ILS.
In the absence of the occurrence of any triggering event, no shares will be issued under the facility. The facility may therefore reach its term without any dilutive impact for the shareholders.
Under the extended facility, the eligible worldwide natural catastrophe events under the transaction include the following:
- earthquake, seaquake, earthquake shock, seismic and/or volcanic disturbance/eruption;
- hurricane, rainstorm, storm, tempest, tornado, cyclone, typhoon;
- tidal wave, tsunami, flood;
- hail, winter weather/freeze, ice storm, weight of snow, avalanche;
- meteor/asteroid impact; and
- landslip, landslide, mudslide, bush fire, forest fire and lightning.
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