Armor Re II Ltd. (Series 2026-2)

American Coastal Insurance Company has recently been back in the catastrophe bond market to expand on its capital markets backed fully-collateralized Florida focused reinsurance, with this Armor Re II Ltd. (Series 2026-2) issuance.

This becomes the eighth successful catastrophe bond issuance to take the name Armor Re and the sixth where American Coastal (AmCoastal) is the sole sponsor and beneficiary of the reinsurance protection.

AmCoastal has used its Bermuda-based special purpose insurer Armor Re II Ltd. again for this visit to the catastrophe bond market.

Armor Re II Ltd. has issued a single $25.5 million tranche of Series 2026-2 Class A notes, Artemis has learned.

The proceeds from the sale of the notes will be used to collateralize a reinsurance agreement between the SPI and American Coastal Insurance Company, we assume.

These notes are structured as discounted, or zero coupon we believe and their term runs from August 1st 2026 until the end of May 2027, with maturity due early June next year, we are told.

As a result, they seem to provide roughly one-year of protection, through the US hurricane season at least.

We don’t have specific details on the coverage the notes provide, but it’s safe to assume the $25.5 million of Armor Re II Series 2026-2 cat bond notes will have an indemnity trigger, given that is how AmCoastal arranges all of its reinsurance and cat bond protection.

We believe these cat bond notes provide a first-event retention buy-down for the AmCoastal reinsurance tower. The reason we think that, is that research shows filings and executive commentary after Q2 referred to a $25.5 million reduction in the retention after additional reinsurance was purchased to buy it down, incepting August 1st.

Executives explained during an earnings call that the buy-down lowered the first-event retention for Florida hurricanes from $49 million to $23.5 million from that date.

As a result, we assume the covered peril is Florida named storm risks.

AmCoastal’s CEO later explained that the $25.5 million retention buy-down reinsurance cost approximately $8.4 million, which might suggest a rate-on-line of approaching 33%.

Given the sizing is the same, at $25.5 million, our assumption for now is that these Armor Re II Ltd. Series 2026-2 catastrophe bond notes are a securitization of the retention buy-down reinsurance arrangement that was in-force from August 1st 2026.

If that proves to be correct, then it means the Armor Re II 2026-2 cat bond notes likely have an attachment point at $23.5 million of losses, and exhaust their coverage at $49 million, on a per-occurrence basis.