Avatar’s Casablanca Re cat bond gets back to $100m at pricing

by Artemis on May 30, 2017

Floridian primary insurer Avatar Property and Casualty Insurance Company’s Casablanca Re Ltd. (Series 2017-1) catastrophe bond transaction is now set to complete at $100 million, as the size increased on all three tranches of notes before final pricing.

The Casablanca Re 2017-1 cat bond had been targeting $100 million of fully-collateralized reinsurance cover for Avatar at its launch, but the highest risk tranche of notes shrank considerably, resulting in the deal target coming down to $87.7 million last week.

But at final pricing the deal’s size has jumped back up to $100 million, we understand, as all three tranches increased in size to support Avatar’s need for Florida named storm reinsurance protection.

The three tranches of notes will all provide Avatar with fully-collateralized reinsurance protection against losses from named storms in Florida, across a three-year term, on a per occurrence basis and using indemnity trigger linked to Avatar’s losses.

The Class A tranche of notes, which started as $55.15 million in size, then increased to a $60 million target, is now set to complete at $66.95 million in size, with pricing now fixed at 3.75% which was in the upper half of initial coupon guidance, we understand.

The Class B tranche, which began at $21.7 million in size has now upsized to $26.3 million, with the pricing fixed at 5.25%, which is towards the lower end of initial guidance.

The final Class C tranche, which is the riskiest and began with a target of $23.15 million of reinsurance cover for Avatar, but shrank right down to $6 million, has now increased slightly to $6.75 million at pricing. The coupon for this tranche is fixed at 16%, the bottom of initial guidance.

We understand that the Casablanca Re Ltd. (Series 2017-1) catastrophe bond is now set to be a June issuance, with completion expected on the 1st of the month. You can read all full details on this and every other cat bond in the Artemis Deal Directory.

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