The final pricing for Bermuda-based specialty insurance and reinsurance firm AXIS Capital Holdings Ltd’s Northshore Re II Ltd. (Series 2017-1) catastrophe bond transaction has now been fixed at a level below the initial guidance range.
The $350 million Northshore Re II cat bond seeks fully-collateralized reinsurance and retrocession for AXIS’ subsidiaries, including its Lloyd’s syndicate, insurers and reinsurers, against industry losses from U.S. named storms, U.S. earthquakes and Canadian earthquakes, on a per-occurrence basis and across a three-year term.
The transaction, which was upsized by 40% during the marketing process, has received strong demand from ILS and cat bond investors helping AXIS to secure more efficient pricing for this layer of reinsurance and retrocession coverage.
The Series 2017-1 Class A notes launched with initial price guidance of 7.5% to 8.5%, that was then tightened down to 7.5% to 8%, before demand drove the coupon guidance even lower to a range of 7% to 7.5%.
Now, we’re told, the pricing has been fixed at the middle of that lowered guidance, so the Northshore Re II cat bond notes will pay investors a coupon of 7.25%. With the initial expected loss of 4.33%, that gives a multiple of around 1.67 times EL, which is aligned with other recent issues from bigger sponsors at this risk and return level.
AXIS will be pleased with the pricing and enlarged size of its latest catastrophe bond transaction, securing it a greater proportion of reinsurance and retrocession from the capital markets at a lower than initially expected rate.
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