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PARIS French reinsurer SCOR has sponsored a € 120 million catastrophe bond issue in a multiyear property catastrophe retrocession agreement with Atlas Reinsurance III P.L.C. of Ireland.
In the transaction, Atlas Re III, a special purpose reinsurance company whose ordinary shares are held in a charitable trust, provides &euros; 120 million in additional reinsurance for SCOR and its affiliates.
SCOR obtains fully collateralized second and subsequent-event retrocession protection against high-severity losses incurred from windstorms in Europe and earthquakes in Japan, for the risk period January 1, 2007, to December 31, 2009, according to the Paris-based group.
The agreement is funded entirely by Atlas Re III's proceeds from the cat bond issue, already fully subscribed in a private placement to institutional investors, said Jim Root, SCOR's director of investor relations. Goldman Sachs was lead bank for the placement, he said.
"This deal is a very cost-effective, safe way for us to get retrocession coverage in the current context of the market, which is very tight and very expensive. It costs us less than going to a standard retrocessionaire," he said Root. The bond improves the group's visibility on its retrocession program for three years, he said.Standard & Poor's Corp. said Thursday that it had assigned its BB+ senior secured debt rating to the principal-at-risk variable-rate notes issued in the deal.