Generali taps capital markets to cover liability risks

Italian insurer Assicurazioni Generali S.p.A. secured $267 million in coverage for third-party auto business through an insurance-linked securities placement earlier this week.

The deal was structured and placed by Willis Capital Markets & Advisory, Willis Towers Watson P. L. C.’s investment banking business.

Horse Capital I DAC is an ILS transaction designed to protect the third-party auto liability loss ratio of a portfolio of subsidiaries of Generali in Europe on a combined basis.

The transaction was completed Monday and is in place to June 2020.

The bond will provide Generali with fully-collateralized protection against a deterioration of the loss ratio of its portfolio as calculated on an annual ultimate loss basis for twelve of its core subsidiaries in aggregate located in seven countries in Europe.

Willis said this arrangement will allow Generali to better manage the volatility of its loss ratio and solvency ratio on one of its core lines of business.

“Through this transaction, Generali opens the door to substantial opportunities with innovative ILS risks for both investors and potential sponsors going forward,” Bill Dubinsky, head of ILS at Willis Capital Markets & Advisory, said in a statement.

ILS placements, or catastrophe bonds, have become popular alternatives to traditional reinsurance over the past several years, but have most frequently been used to cover property risks.

Quentin Perrot, vice president of Willis Capital Markets & Advisory, said there have been a few casualty catastrophe bonds in the past, but most of them pre-date the financial crisis.