Allianz joins the cat bond bonanza, takes €250m against Euro-windstorm
Allianz returned to the cat bond market after a decade of absence, sponsoring a new multi-year catastrophe bond providing €250 million of protection against European windstorms and highlighting a primary carrier stampede into cat bonds after the reinsurance rest of 2023.
“Allianz is pleased to secure multi-year protection against our peak natural peril, windstorms in Europe, by returning to the insurance-linked securities market,” Thorsten Fromhold, group reinsurance officer at Allianz Re, said of what Allianz claims is its first cat bond protecting Allianz’ own account in over a decade. The deal “broadens our risk mitigation toolbox.”
Three-year protection runs from January 2024 to December 2026 with a trigger based on an insurance industry loss index.
“The notes sold to capital market investors were well received and benefited from high investor demand,” management said.
Cat bond issuance hit a new record in 2023 at $15 billion in 2023 as the nat cat reinsurance market reset pushed cedants to diversify funding, often stacking cat bonds at the top of reinsurance towers.
The 2023 tally, up 8% from the prior year, brings total outstanding to $41 billion, one recent market study claimed. .
Collateralized reinsurance, placed lower in reinsurance towers, has continued to suffer a comparatively cold shoulder from investors, with sums apparently down again in 2023.
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