East Lane Re VI cat bond upsizes to $270m for Chubb, prices at low-end

by Artemis on March 10, 2014

The East Lane Re VI Ltd. (Series 2014-1) catastrophe bond, sponsored by U.S. primary insurance group Chubb, has now completed at the increased size of $270m with pricing at the low-end of the previously reduced range.

As Artemis reported last week the East Lane Re VI cat bond, which is Chubb’s sixth issuance, was marketed with a range in terms of size of somewhere between the original $225m and $270m, while the price guidance had been lowered and tightened from the launch guidance of 3% to 3.75% down to 2.75% to 3%.

Market sources tell Artemis that Chubb has successfully secured the maximum size of $270m for East Lane Re VI, while at the same time securing the largest saving in terms of the coupon it will pay to investors as the cat bond notes priced at the lowest end of the reduced range at 2.75%.

That means that the East Lane Re VI catastrophe bond has increased in size by 20% while marketing and the pricing has dropped by nearly 19%, if calculated from the mid-point of the initial coupon guidance range.

So East Lane Re VI Ltd. has secured Chubb a four-year $270m source of fully-collateralized reinsurance protection for the perils of U.S. named storms, earthquakes (including fire following and sprinkler leakage), severe thunderstorms and winter storms, on an indemnity and per-occurrence basis.

The East Lane Re VI Ltd. principal at-risk variable rate note program and the $270m Series 2014-1 tranche of variable rate cat bond notes have been admitted for listing on the Cayman Islands Stock Exchange.

Once again investor demand for catastrophe bonds and insurance linked investments are demonstrated as another 2014 cat bond grows and sees its coupon drop. Chubb’s latest cat bond is another to contain some unmodelled risks within the covered business again showing that investors are becoming more comfortable with the inclusion of more complex risks within a catastrophe bond deal.

The East Lane Re VI Ltd. (Series 2014-1) catastrophe bond from Chubb has now completed. The cat bond has been added to the Artemis Deal Directory along with every other transaction launched in 2014.

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