Cranberry Re cat bond target upped to $300m for Massachusetts MPIUA

by Artemis on May 31, 2017

The latest catastrophe bond to be sponsored by the Massachusetts Property Insurance Underwriting Association (MPIUA) looks set to increase in size, with the target size for the Cranberry Re Ltd. (Series 2017-1) deal now having been lifted to between $250 million and as much as $300 million.

At the same time as increasing the target for the Cranberry Re 2017-1 cat bond, the price guidance for the notes coupon has been narrowed towards the bottom-end of guidance, once again reflecting high demand for new catastrophe bond investment opportunities, even at the lower risk/return end of the spectrum where this transaction will sit.

The MPIUA is the wind pool property insurer of last resort in the state of Massachusetts and has previously been the beneficiary of catastrophe bond, with its 2010 transaction Shore Re Ltd. that matured in 2013 and the Cranberry Re Ltd. (Series 2015-1) that matures in June 2018.

This new Cranberry Re 2017-1 cat bond will add to the protection from the 2015 deal, as it seeks a similar fully-collateralized source of reinsurance protection against losses from State of Massachusetts named storms (so tropical storm and hurricane risks), severe thunderstorms and winter storms.

At launch the transaction was targeting $250 million of reinsurance protection for the MPIUA, but now the target for the single tranche of Class A notes has been lifted to up to $300 million, as the sponsor looks to secure a little more coverage if pricing is conducive.

At the same time, the notes initial price guidance, which had been set at 2% to 2.5%, has now been narrowed towards the lower end of that range, at 2% to 2.25%, we understand.

The expectation is that this cat bond will be priced at the end of this week and complete towards the end of the next.

You can read all about the Cranberry Re Ltd. (Series 2017-1) catastrophe bond and every other deal in the Artemis Deal Directory.

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