United Insurance Holdings (UPC Insurance) latest catastrophe bond looks set to achieve efficient execution as the coupon price guidance range has been slashed on its still $100 million sized Armor Re II Ltd. (Series 2018-1) cat bond issue.
The Armor Re II cat bond transaction will provide UPC Insurance subsidiaries United Property & Casualty Insurance Co., Family Security Insurance Co., Interboro Insurance Co. and American Coastal Insurance with a two-year source of fully-collateralized reinsurance protection against losses from U.S. named storms and earthquakes.
This deal was launched to ILS investors in March, with a targeted size of $100 million from the single tranche of Class A notes, which will provide UPC’s insurers with collateralized reinsurance on an indemnity trigger, per-occurrence and cascading basis.
There’s no sign of the Armor Re II 2018 cat bond upsizing, but clearly the appetite from investors has been strong for this deal as the pricing guidance range has now been slashed to below the initial level.
The single $100 million tranche of Class A notes to be issued by Armor Re II Ltd., which have an initial expected loss of 1.07%, were initially offered to cat bond investors with coupon pricing in a range from 4% to 4.5%.
However, this has now fallen and we’re told the new coupon price guidance for the notes is in a range from 3.5% to 4%.
So it currently looks like this will be yet another 2018 catastrophe bond that sees its pricing come in either at the bottom of or below the initial guidance range, reflecting the strong appetite and efficient reinsurance protection that the catastrophe bond market can provide.