The Talanx Group has issued its first catastrophe bond, securing multi-year protection against earthquake risks in Chile.
The $100 million bond was issued through Maschpark Re Ltd, a Bermuda-based special purpose insurer, in collaboration with Talanx subsidiary Hannover Re.
Talanx AG CFO Dr Jan Wicke (pictured above) stated that the bond enhances the group’s reinsurance coverage in Chile, a key market for the company.
“We are a global insurance group enjoying ongoing growth and hence have an increased need for reinsurance protection,” Wicke said. “We are augmenting our protection for earthquake risks in Chile due to our strong market position there. Our cat bond transfers the risk to the capital markets, diversifying our traditional reinsurance programs. We are delighted to be assisted in this by Hannover Re – a strong group partner with in-depth know-how and many years’ expertise on the ILS and cat bond market.”
Hannover Re, a subsidiary of Talanx and a leader in the insurance-linked securities (ILS) and catastrophe bond markets, played a key role in structuring the bond.
Silke Sehm, a member of Hannover Re’s executive board responsible for property and casualty reinsurance, emphasized the company’s experience in this area.
“Since placing the world’s first risk securitization 30 years ago, Hannover Re has amassed in-depth expertise in transferring insurance risk to the capital markets, and has successfully helped numerous customers from a very wide range of sectors. We are now an ILS market leader, supporting both existing partners and new customers. We are delighted to have also provided leading-edge assistance to Talanx during its debut,” Sehm said.
The bond provides Talanx with coverage from January 2025 to December 2027. It employs a parametric trigger mechanism, meaning that payouts depend on the magnitude of an earthquake rather than actual loss amounts.
This approach enables quicker payouts based on predefined criteria, aligning with Talanx’s risk management strategy for Chile, a country prone to seismic activity.
The issuance of the cat bond was facilitated by Aon Securities LLC and GC Securities, a division of MMC Securities LLC.
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