Armor Re II Ltd. (Series 2024-2)

American Coastal Insurance Company is back in the catastrophe bond market and looking to expand on its capital markets backed fully-collateralized Florida hurricane reinsurance with this Armor Re II Ltd. (Series 2024-2) issuance.

This will be the second Armor Re II catastrophe bond from the insurer of 2024, having sponsored a $200 million Armor Re II Ltd. (Series 2024-1) cat bond issuance back in April.

For this issuance, AmCoastal is again using its Bermuda-based special purpose insurer Armor Re II Ltd. and the vehicle will seek to issue a single tranche of Series 2024-2 Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the SPI and American Coastal Insurance Company.

These Armor Re II 2024-2 Class A notes will provide American Coastal with a just over three-year source of Florida named storm reinsurance protection, running to the end of December 2027, we are told

The notes have been structured to protect AmCoastal with Florida named storm and hurricane reinsurance on an indemnity trigger and per-occurrence basis over that risk period.

Armor Re II is looking to issue $100 million or more in Class A notes, with their coverage set to attach at $50 million of losses to AmCoastal Insurance and exhaust their reinsurance coverage at $250 million, which means there is ample room for this new cat bond to upsize for the insurer, should the cat bond investor community be receptive to it.

The $100 million of Series 2024-2 Class A notes that Armor Re II Ltd. will issue come with an initial attachment probability of 0.75%, an initial expected loss of 0.59% and are being offered to cat bond investors with spread price guidance in a range from 9% to 10%, sources said.

While the attachment point looks low at $50 million, the Series 2024-2 notes sit above stated reinsurance and the FHCF participation, which means that the effective attachment point looks more like a ground-up loss of almost $1.13 billion to AmCoastal.

Update 1:

American Coastal’s target size for this catastrophe bond has increased, with now up to $150 million of reinsurance being sought.

At the same time, we’re told the price guidance for the Class A Series 2024-2 notes that Armor Re II Ltd. will issuance has been lowered to the bottom-end of the initial range, at 9%.

Update 2:

The target size for this latest catastrophe bond from American Coastal Insurance was raised again, with now up to $200 million of reinsurance sought.

The price guidance has reverted to a range again, at an updated between 8.5% and 9%, we are told.

Update 3:

American Coastal Insurance eventually secured the upsized $200 million of reinsurance from this Armor Re II 2024-2 catastrophe bond, while the Class A notes were priced at the bottom end of the reduced guidance, to pay investors a spread of 8.5%.