East Lane Re VI 2015 cat bond grows to $250m, prices at mid-point

by Artemis on March 3, 2015

U.S. primary insurer Chubb’s latest catastrophe bond, the East Lane Re VI Ltd. (Series 2015-1) U.S. multi-peril deal, will complete at an upsized $250m, while the pricing settled at the mid-point of original guidance.

Chubb’s East Lane Re VI 2015-1 cat bond launched almost two weeks ago with the insurer looking to secure a new five-year source of fully-collateralized reinsurance protection against losses from multiple U.S. perils. The deal launched as a single Class A tranche of notes with a preliminary size of $225m.

In the next update on the transaction the cat bond looked set to upsize, as sources suggested a range of $225m to $250m for the single tranche of notes. At the same time the coupon price guidance was narrowed from the initial 3.5% to 4% to 3.5% to 3.75%.

Now, we understand that Chubb has upsized the deal and the East Lane Re VI cat bond will complete at $250m in size. The pricing however did not continue downwards and has settled at 3.75%, the upper end of the narrowed range or the mid-point of the deal’s launch coupon guidance.

This reflects the ongoing ambition of ILS investors to establish a floor beyond which pricing will not slip. This seems to be driven by a desire for a return delivering reasonable multiples of expected loss. In the case of this cat bond, with pricing of 3.75% and an expected loss of 1.24%, investors have secured a multiple of 3X.

So with East Lane Re VI Chubb will benefit from a $250m five-year source of indemnity reinsurance cover for losses from U.S. named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impact and volcanic eruption risks on a per-occurrence basis and using an indemnity trigger.

Chubb’s East Lane Re VI Ltd. (Series 2015-1) catastrophe bond is scheduled to complete later this week. You can read all about it in our Deal Directory.

Also read:

Chubb returns with $225m East Lane Re VI 2015 multi-peril cat bond.

S&P considers unmodelled perils in rating East Lane Re VI cat bond.

Chubb’s East Lane Re VI 2015 cat bond pricing narrows, may upsize.

Subscribe for free and receive weekly Artemis email updates

Sign up for our regular free email newsletter and ensure you never miss any of the news from Artemis.

← Older Article

Newer Article →