US ICMIF member Securian Financial, through its affiliate company Minnesota Life Insurance Company, has successfully completed a USD 100 million insurance-linked security (ILS) transaction, becoming the first US direct writer of life insurance to utilize an extreme mortality bond structure.
La Vie Re, a special purpose insurer not affiliated with Securian Financial, issued USD 100 million of Series 2020-1 Class A notes to investors, which closed on October 23. The transaction was structured and placed by Willis Re Securities, in collaboration with ICMIF Supporting Member Willis Re.
The transaction is the first Rule 144A catastrophe bond exposed to extreme mortality risk featuring an indemnity trigger on an annual loss ratio basis. The arrangement with La Vie Re provides Minnesota Life with USD 100 million of fully collateralized excess of loss reinsurance protection for the company’s group insurance business over a three-year period.
“The La Vie Re issuance allows us to protect our balance sheet while strengthening our capital position and driving capital efficiency,” said Warren Zaccaro, Securian Financial Executive Vice President and CFO. “We are very pleased with the reception from capital market investors on this inaugural ILS transaction, confirming both the quality of our portfolio and the marketplace’s interest in new risks.”
“Diversifying our reinsurance capacity by accessing the capital markets is a natural complement to our traditional reinsurance programmes,” added Paul Rudeen, Vice President and Head of Reinsurance. “Through this innovative transaction, we increase our current and long-term financial flexibility.”
Quentin Perrot, Senior Vice President, Willis Re Securities said: “We are proud to have supported Securian in its inaugural catastrophe bond transaction. Thanks to the robust structure that an underwritten Rule 144A cat bond offers, investors have supported this first indemnity extreme mortality bond.
“This speaks to the increased openness of the ILS market to not only broaden the scope of assumed risks, but also recognises the strength of the Minnesota Life portfolio.”
Jim Fallon, Executive Vice President, Willis Re added: “The La Vie Re cat bond will allow Securian Financial a long term and more sustainable access to the broader capital market investors. It demonstrates Securian Financial’s strategic utilisation of all the available sources of reinsurance capital.
“Our team’s deep technical knowledge of Life, Accident and Health risk, ability to collaborate with our client and determination to find optimal solutions, were instrumental in successfully navigating the challenges of the present market environment. We are delighted to strengthen our relationship with Securian Financial through the issuance of this catastrophe bond.”
Other ICMIF members announce catastrophe bond transactions
Early this year, Willis Re and Willis Re Securities announced that they had also structured and placed catastrophe bonds for ICMIF members Achmea (Netherlands) and Unipol (Italy).
In June, they announced that they had structured and placed EUR 100 million of ILS for Achmea Reinsurance Company, the reinsurance arm of Achmea. Windmill II Re DAC, settled June 22 and provides Achmea with a single EUR 100 million tranche of fully collateralized protection against European windstorm risk for a four-year period.
Then, in July, Willis announced a further EUR 100 million in ILS for UnipolSai, the insurance arm of leading Italian financial group Unipol. Azzurro Re II Series 2020-1 settled on July 10 and provides UnipolSai with a single EUR 100 million tranche of fully collateralised protection against earthquake risk in Italy and neighbouring countries for a three-and-a-half-year period.
Both structures featured an indemnity trigger on a per occurrence basis with terms following the traditional reinsurance placement, to ensure effective integration within their respective property catastrophe reinsurance programmes.
