Armor Re II Ltd. (Series 2024-1)

This is the first catastrophe bond to solely benefit American Coastal Insurance Company since 2014, as issues since then under the Armor Re series of cat bonds had also included other carriers of the United Insurance Holdings group, such as UPC Insurance and Interboro.

But, with UPC Insurance running-off, American Coastal Insurance Company is now the main Florida entity and has returned to the catastrophe bond market in search of $150 million or more in named storm reinsurance, on a multi-year basis.

The Bermuda based Armor Re II Ltd. special purpose insurer will seek to issue a single tranche of Series 2024-1 Class A notes, to be sold to investors and the proceeds used to collateralize a reinsurance agreement with American Coastal Insurance Company.

The Armor Re II 2024-1 notes will provide American Coastal with a three-year source of Florida named storm reinsurance protection, running to the end of April 2027, we understand.

The notes are structured to protect American Coastal on an indemnity and per-occurrence basis over that risk period.

$150 million of Class notes are said to be on offer, with their coverage set to attach at $275 million and exhaust at $575 million, meaning there would be plenty of room for this new cat bond to upsize for American Coastal, should the cat bond investor market be receptive to it.

The $150 million of Class A notes that Armor Re II Ltd. will issue come with an initial attachment probability of 1.38%, an initial expected loss of 0.89% and are being offered to cat bond investors with spread price guidance in a range from 10% to 11%, we are told.

Update 1:

We’re told that the Armor Re II Series 2024-1 Class A notes issuance has been upsized to provide $200 million of Florida named storm reinsurance to American Coastal.

At the same time, the price guidance has been lowered to 10.25%, so within the initial guidance range, but towards the lower-end of it.

Update 2:

American Coastal secured the upsized $200 million of reinsurance from its latest catastrophe bond, while the pricing was finalised at the reduced spread level of 10.25%, so within the lower half of initial guidance.