2 weeks ago
7
American Family Mutual Insurance Company (AmFam) has for the second time raised the target size of its latest catastrophe bond, with now $275 million in collateralized reinsurance protection being sought from the Four Lakes Re Ltd. (Series 2024-1) cat bond issuance, Artemis has learned.
AmFam came back to the catastrophe bond market in November, initially aiming to secure $175 million in multi-peril reinsurance protection to expand its capital markets backed fully-collateralized catastrophe reinsurance arrangements.
As we reported at the end of last week, AmFam’s target size for the Four Lakes Re 2024-1 cat bond increased, with $250 million of reinsurance being sought and at the same time the price guidance fell.
Now, sources have told us that the targeted size for the cat bond issuance has been raised again, with AmFam now aiming to secure $275 million in capital market backed reinsurance from this deal.
While we’re also told the price guidance which had been fixed at a lower level, has now reverted back to a guidance range, but at an even lower base.
It’s a similar story to other cat bonds in the market, as with cat bond funds still having cash on-hand from maturities, coupon earnings and some fresh inflows, the market continues to deliver very strong execution to cat bond sponsors.
So, taking into account the new target size if it is achieved, once issued this Four Lakes Re 2024-1 cat bond would provide AmFam with $275 million of collateralized and multi-year reinsurance protection against losses from US named storms, earthquakes, severe thunderstorms, winter storms and wildfires, on a per-occurrence and indemnity trigger basis, running from January 2025 to the end of December 2027.
What was initially targeted to be a $125 million Class A tranche of Series 2024-1 notes and had been upsized first to $175 million, are now being offered as a $200 million tranche to investors, we understand.
The Class A notes have an initial expected loss of 1.64% and were first offered to investors with spread price guidance in a range from 5.75% to 6.5%, which then fell and was fixed at the lower-end of 5.75%, but sources now say this is back in a lower range at between 5.5% and 5.75%.
What was a $50 million Class B tranche of notes were lifted to $75 million in size and still remain there after this second update, we are told..
The Class B notes have an initial expected loss of 2.77% and were first offered with spread price guidance in a range from 8.5% to 9.25%, which was also then fixed at the low-end of 8.5% at the first update, but we’re now told has also reverted back to a range at between 8.25% and 8.5%.
Bookrunners are doing their upmost to secure value for sponsors in the catastrophe bond market during this period of strong execution.
It’s certainly not always the most efficient way to run a book, or price deals, being very manual, but right now it is driving value for cedents with very strong price execution and increased issuance sizes being seen across almost every catastrophe bond issuance in recent weeks.
You can read all about this new Four Lakes Re Ltd. (Series 2024-1) catastrophe bond from American Family in the Artemis Deal Directory.
English (US) ·