Natixis CIB offers its clients a new cat bond solution integrating an ESG dimension

Friday, 9 september 2022

In today’s landscape with an ever-increasing number of extreme climate events as a result of climate change, insurers and reinsurers are both keen to reduce their risk exposure. With this in mind, Natixis CIB and reinsurance broker GC Securities have joined forces to develop an innovative cat bond solution that incorporates an ESG dimension.

Insurers’ and reinsurers’ risks have increased considerably over the past two decades with their cost multiplying fivefold in the space of twenty years. 

To tackle this challenge and reduce their exposure, these groups draw on a broad range of financial products, including cat bonds, to transfer part or all risks resulting from these exceptional events to investors. 

Insurers pay a premium to investors and use investors’ capital to pay customers’ claims. If no climate events occur, then investors recover their initial investment. 

A new cat bond model is currently emerging – green or ESG cat bonds – which have a specific framework, whereby the issuer pledges to meet a number of ESG criteria according market standards and a range of measurable impact indicators for them through regular reporting. 

This model thus offers clearer visibility for investors and affords proof that their investment is being used appropriately, complying with the usual transparency and impact requirements in line with sustainable finance criteria.  

View our video with Natixis CIB’s Nicolas Mérigot, Head of Global Structured Credit and Solutions, France and Julien Duquenne, Global Head of Sustainability & Global Financing Services – Natixis CIB, Natixis IM, and GC Securities’ Quentin Perrot, Managing Director.  They explain the opportunities offered by ESG cat bond issues, today’s challenges facing insurers and investors, and the role of banks and reinsurance brokers in addressing investors’ ESG needs.