Baldwin Re Ltd. (Series 2025-1)

This is the third catastrophe bond under the Baldwin Re program for sponsor Vermont Mutual Insurance Company and looks set to be the largest yet, with an initial target to secure $200 million in reinsurance from the capital markets.

Once again, this third catastrophe bond from the company is substantially similar to the first two, in covering the same regions and perils.

Bermuda based special purpose insurer Baldwin Re Ltd. will issue a single tranche of Series 2025-1 Class A notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement covering the sponsor Vermont Mutual, as well as its named affiliates Northern Security Insurance Company, Inc. and Granite Insurance Company, we understand.

With an initial target to secure $200 million of reinsurance this will become the largest cat bond for the company and like the others it will provide Vermont Mutual Insurance and subsidiaries with four years of catastrophe reinsurance to the end of June 2029, on an indemnity and per-occurrence basis.

The covered perils are the same as the 2023 deal, being US Northeast, named storm, earthquake, severe weather, and fire, while the covered area is also the same, being Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

We’re told the currently $200 million of Series 2025-1 Class A notes that Baldwin Re Ltd. is set to issue would attach their coverage at $500 million of losses to Vermont Mutual, covering a share up to exhaustion at $1 billion.

As a result, the notes come with an initial attachment probability of 1.453%, an initial base expected loss of 1.1% and they are being offered to investors with pricing guidance for a spread of between 3.75% and 4.25%, sources said.

Update 1:

We’re told that Vermont Mutual has raised the target size for this Baldwin Re 2025-1 catastrophe bond, with now between $200 million and $250 million of reinsurance protection sought.

At the same time the price guidance has been placed as a single figure, for a spread of 3.75%, so the bottom of the initial guidance range.

Update 2:

Vermont Mutual secured the 25% upsized target for $250 million of fully collateralized multi-peril reinsurance from its latest Baldwin Re 2025-1 catastrophe bond issuance.

The notes were priced to pay investors a spread of 3.75%, so at the bottom of initial guidance.