Lottoland increases jackpot insurance cover to €120m on back of growth
Lottoland has entered into a new insurance-linked securities (ILS) agreement, bumping up its insurance cover under the scheme to €120 million in what is the largest reinsurance deal in the gambling industry, it announced today.
The secondary lottery provider first set up an insurance-linked securities agreement in 2015 as a way of protecting itself against large wins for the many betting-on-lottery products it provides.
The initial €100 million deal (Fortuna 1) was a two-year transaction but triggered a renewal option a year early in 2016 (Fortuna 2) due to the company’s strong growth.
For analysis on the latest deal and details of how secondary lotteries are working with capital markets, read the full analysis (paywall).
The ILS was now due for renewal but Lottoland founder David von Rosen said the company’s further growth meant it had become necessary – and also cost effective – to increase the coverage.
“At €120 million it is substantially bigger than our last ILS,” he said. “It’s a big step for us to see that the current investors are not only staying on board and are renewing but also that we have some new investors joining our Fortuna 3 transaction.
“The increase in size is due to the rapid growth at Lottoland — meaning that more and more bets are now being insured through the ILS which helped us to get a larger amount of cover. Thus volumes are sufficiently high to back the premiums. We’ve been growing considerably when it comes to our B2C operation, not only through international expansion but also through new products.
“Another reason for the increase of the ILS is that investors trust us after years of good collaboration and we have the necessary internal procedures in place. What is increasingly important for us in this ILS deal is it has become much more flexible for us, meaning that it will also be able to insure more products.”
The company has also recently been growing on the B2B side via its Lottoland Solutions arm, with partnerships announced with Kindred, William Hill Australia and Gaming Innovation Group over the past couple of months.
Insurance-linked securities are financial instruments that are sold to investors that pay out if a lottery win of a certain amount takes place. The largest win paid out so far by Lottoland’s ILS was a €22 million prize paid out last year to a German player.
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