Integrity Re cat bond pricing fixed at bottom of reduced guidance

by Artemis on April 24, 2017

The majority of the pricing marks for the $210 million Integrity Re Ltd. (Series 2017-1) catastrophe bond transaction are now fixed at the bottom of reduced guidance, as the deal sponsored by American Integrity Insurance Company of Florida, Inc. looks set to secure efficiently priced collateralized reinsurance capacity.

The Integrity Re 2017-1 cat bond was launched targeting a $178 million source of collateralized reinsurance protection to protect American Integrity against losses from Florida named storms and severe thunderstorms, across a three year term and on an indemnity and per-occurrence basis.

It swiftly upsized to $210 million while marketing and at the same time the majority of pricing guidance fell to lower than the initial ranges, reflecting strong cat bond and ILS investor appetite.

Now the pricing has been fixed, with most tranches settling at the lowest end of the already lowered guidance, helping American Integrity to a cost-effective first catastrophe bond issue.

The $72 million Class A tranche of notes, covering Florida named storms only, which went from initial coupon price guidance of 3.5% to 4% to a reduced 3.25% to 3.5%, has been priced at the lowest end at 3.25%.

The $3 million Class B tranche is the only exception here due to being the riskiest of the four, covering Florida named storms on a second and subsequent event basis, began with price guidance of 13.75% to 14.5%, and finally priced at the upper end at 14.5% level.

The Class C tranche, covering Florida named storm cover on a first and subsequent event basis, launched with pricing at 4% to 4.5%, and has priced at 4% we understand.

Finally, the Class D notes, covering Florida named storms and severe thunderstorms both on a first and subsequent event basis, launched with coupon price guidance of 4.5% to 5%, which was dropped to 4.25% to 4.5% and we now understand has been priced at the lowest end at 4.25%.

So yet another 2017 catastrophe bond has priced at very low levels, benefiting the sponsor with an efficient source of reinsurance coverage from the capital markets.

Cat bond issuance conditions remain very attractive and as a result we understand that the pipeline remains strong and other first time sponsors are increasingly showing interest in capital markets coverage.

You can read all about the Integrity Re Ltd. (Series 2017-1) cat bond and every other transaction in the Artemis Deal Directory.

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