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The European (re)insurance supervisor said correlation to financial market risk made the idea a challenging one while reinsurance appetite is also very limited.
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The deal is set to pay a higher coupon than most other outstanding CEA bonds, but target spreads are 18% below a similar May 2020 transaction.
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The move follows Fidelis’ decision to hand back $275mn it had raised for a retro vehicle.
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The move gives Credit Suisse a UCITS cat bond fund alongside its existing ILS products. -
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The spreads on the ultra-low-risk deal are the highest on this series in the past six years and 50% up from a low baseline last year.
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The firm aims to use AI to fill the protection gap left by “black swan” events like Covid-19.
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The first cat bond of 2021 supports brokers’ forecasts of favourable pricing trends for cedants, as pricing has dropped 17% year-on-year.
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The utility did not disclose which insurers would receive payments.
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A “pooling fund for disasters” would leverage insurance and reinsurance markets as a backstop.
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The sector has received a post-Covid boost heading into January, with strong interest in liquid cat bonds, but challenges around structures, pandemic exposures and lifting ESG commitments will remain.
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Spreads on the mortgage credit investor’s bond have also dropped nearly 10% across both tranches.
