Flood Re secures £140m in flood retro with debut cat bond

To bolster its financial resilience against UK flood risks, Flood Re has successfully launched its first catastrophe bond, Vision 2039 – Series 2025-1, securing £140 million in retrocession reinsurance coverage.

This transaction is a first for the UK flood insurance scheme, and with it Flood Re marks its entry into the cat bond market, enhancing its ability to provide affordable coverage to homeowners.

The Vision 2039 cat bond was issued through the Lloyd’s insurance-linked securities (ILS) transformer structure London Bridge 2 PCC Limited.

The innovative bond covers losses across England, Wales, Scotland and Northern Ireland, providing three years of retrocessional UK flood reinsurance.

Perry Thomas, CEO of Flood Re, commented: “We are pleased to announce the successful completion of our debut catastrophe bond, Vision 2039 – an innovative transaction that strengthens our reinsurance programme and enhances protection for UK households against flooding.

“This milestone expands our access to alternative private market risk transfer, and complements our wider traditional reinsurance structure reducing reliance on traditional reinsurance.”

With this transaction, Flood Re has strengthened its reinsurance programme, marking a significant step in its broader risk transfer strategy for the next three years.

By complementing traditional reinsurance partnerships with access to the wider capital markets through the issuance, Flood Re is enhancing the scheme’s resilience and sustainability.

Thomas added: “Over time, we expect subsequent issuances to become even more cost-effective, improving programme efficiency. Developing our capability in this market supports Flood Re’s medium-term viability and long-term transition planning.

“As we move into a new era for the scheme, we remain committed to building lasting resilience and protection for future generations.”

Reinsurance broker Guy Carpenter supported Flood Re on the issuance of this cat bond.

The successful placement of Vision 2039 underscores the scheme’s commitment to innovation in risk management, ensuring that affordable flood insurance remains accessible to UK households facing the growing threat of flooding.

Moreover, Vision 2039 highlights Flood Re’s commitment to innovation in risk management, which ensures affordable flood insurance remains accessible to UK households facing the growing threat of flooding, the reinsurer stated.

Burkhard Keese, Chief Financial Officer, Lloyd’s, commented: “I am delighted to see London Bridge 2 as the issuance vehicle for Flood Re’s inaugural Cat Bond, the first time it has been used to support the reinsurance of risk from a non-Lloyd’s insurer.

“Flood Re is an important element in the UK insurance industry’s response to flood risk and that includes the provision of flood reinsurance to multiple Lloyd’s syndicates. This is yet another milestone in LB2’s growth and development journey as a meaningful source of capital and risk transfer capacity, and we look forward to maintaining this momentum during 2025.”

This transaction represents a major accomplishment for the UK financial services industry. Vision 2039 is not only the first UK flood risk indemnity cat bond to be introduced to the market but also the first time a non-Lloyd’s entity has utilized the London Bridge 2 vehicle.

Jennifer Tait, Partner, Willkie Farr & Gallagher, added: “Willkie was pleased to advise Flood Re on its inaugural catastrophe bond transaction, marking the first ever catastrophe bond in the UK designed to protect against flood losses on an indemnity trigger basis.

“This transaction is a significant milestone for Flood Re, further diversifying its reinsurance programme, and for UK households, ensuring the continued availability and accessibility of flood insurance.”

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