1 month ago
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US insurance firm Progressive is the latest to seek an upsized execution from its latest venture to the catastrophe bond market, with the firm now seeking a 53% upsized $345 million in multi-peril reinsurance from this Bonanza Re Ltd. (Series 2024-1) issuance.
Progressive returned to the cat bond market in late November, with what will be the eighth catastrophe bond under the Bonanza Re name.
Initially, the insurer was seeking a $225 million source of capital markets backed protection on both a aggregate and occurrence basis from its latest catastrophe bond.
We’re now told that Progressive looks set to be the latest to benefit from strong investor demand, as the company has now lifted the target size of this Bonanza Re 2024-1 cat bond issuance to $345 million.
This Bonanza Re 2024-1 cat bond will ultimately provide its sponsor with one year of aggregate reinsurance and three years of occurrence coverage, across the perils of named storm, earthquake (fire-following only), severe thunderstorm, winter storm, wildfire in the United States.
What was a $50 million tranche of zero-coupon discount Class A notes are now offered at $70 million in size, we are told. They are designed to provide aggregate coverage across just a single year through 2025, and have two sections with a shared limit, one focused on multi-peril cover and the other named storm only.
The now $70 million Class A tranche of notes come with an initial expected loss of 4.09% and were first offered to cat bond investors with price guidance of 79% to 77% of par, which is a rough spread equivalent of 21% to 23%, but we’re told that has reduced to a range of 80% to 79% of par, an effective coupon equivalent of 20% to 21%.
The other two tranches will provide Progressive with three calendar years of indemnity and per-occurrence multi-peril reinsurance protection to the end of 2027.
The Class B tranche of notes remain $75 million in size, with an initial expected loss of 0.76% and they were at first offered with price guidance of between 4.5% and 5.25%, but that has lowered to a new range of 4% to 4.45%, sources said.
What was a $100 million tranche of Class C notes are now targeted at double that, for $200 million of protection, having an initial expected loss of 1.82%, they were first offered with spread price guidance of between 6.5% and 7.25%, but that has now also fallen to a new range of between 6% and 6.5%.
So this looks like yet another example of very strong execution for the sponsor, with Progressive selectively targeting to increase the size of one tranche significantly, as well as a small increase to the aggregate protection this cat bond will provide it.
You can read all about this Bonanza Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond ever issued in the Artemis Deal Directory.
English (US) ·