French reinsurer CCR Re has set up the first insurance-linked securities (ILS) instrument governed by French law, 157 Re, which is also the first reinsurance sidecar vehicle to be domiciled in France.
157 Re will assume a quota share of CCR Re’s worldwide property catastrophe portfolio, and provide it with fully collateralised capacity to achieve its target of diversified and profitable organic growth.
Additionally, it will provide CCR Re with full Solvency II regulatory credit and give it access to a new competitive and agile investor base.
The sidecar incepts on 1 April 2019 and is the first generation of what is expected to be an annually recurrent instrument in coordination with investors in order to support CCR Re’s growth on property catastrophe business.
157 Re takes the form of a mutual securitisation fund (fonds commun de titrisation) that has traditionally been used for financial assets securitisation only and has been licensed by the French supervisory authority, Autorité de Contrôle Prudentiel et de Résolution.
The French tax authorities have provided formal guidance in respect of the tax treatment of the operation for the investors.
CCR Re’s parent company, CCR, is a reinsurer owned by the French state that provides cover against other extreme risks in France.
Bertrand Labilloy, chairman and CEO of CCR Re, commented: “By creating and sponsoring 157 Re, the first ever French ILS instrument, CCR Re’s teams have confirmed their innovative skills and mindset, as well as their commitment to promoting the Paris financial market place attractiveness and development.”
“I would also like to express my sincere appreciation to our advisors for their support, agility, and decisive contribution to the success of this transaction which is strategic for CCR Re.”
“We have been impressed with the commitment and command displayed by all the parties involved throughout the structuring and set up process.”
In addition, France Titrisation acted as management company, BNP Paribas Securities Services acted as custodian, Linklaters acted as transaction counsel, and Clyde & Co acted as counsel to CCR Re on the reinsurance matters.
Willis Towers Watson Securities, the securities affiliate of Willis Re, acted as the lead structuring agent for the issuance.
Senior vice-president at Willis Towers Watson Securities Quentin Perrot noted: “For this first transaction to use the French FCT regime covering insurance risks, we have been impressed with the commitment and responsiveness displayed by all the parties involved throughout the structuring and placement process.”
“This makes the French FCT regime highly attractive, in particular for European based cedants who can benefit from the Solvency II regulatory credit for their ILS transactions”.
