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Generali pursues ‘green cat bond’ route for EUR200mn Lion Re III renewal

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Generali is seeking to create a “green cat bond” through new features in a renewal of its Lion Re cat bond, Trading Risk understands.

The insurer will allocate the equivalent capital freed up from the reinsurance transaction into project investment that fits within its green criteria, and the collateral raised from investors will be put in unsecured green bonds issued by the European Bank for Reconstruction and Development (EBRD).

Generali is seeking to raise EUR200mn from Lion Re III to replace the Lion Re II deal issued in 2017.

The cedant said it will not upsize the occurrence indemnity deal, which covers European windstorm risk in 22 countries plus the United Kingdom and Italian earthquake. The 2017 bond also included European flood risk.

The spread offered has been set at a target of 4%-4.5%, equating to 1.4 times the expected loss of 2.99%.

GC Securities is the broker and the modeler is Air Worldwide.

In 2017 Lion Re II was the first ILS transaction to cover European flooding, windstorm and earthquake. It also set a precedent – repeated this time around – by its timing outside of the late Q3 or Q4 window more common for European ILS issuances.

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