Bridge Street Re Ltd. (Series 2025-1)

Australia headquartered global insurance and reinsurance group QBE has returned to the catastrophe bond market for the first time since 2013, seeking $250 million or more in collateralized retrocession for coverage across peak North American perils.

This time QBE is leveraging two new Bermuda Class 4 entities it has recently set up to add efficiency to the way it organises its reinsurance offerings and balance-sheet needs, QBE Capital Ltd. and QBE Capital (Global) Ltd., which are the two cedents to this new Bridge Street Re cat bond.

Bridge Street Re Ltd. has been established to be a special purpose insurer (SPI) in Bermuda and it is looking to issue a single tranche of Series 2025-1 Class A notes, that will be sold to investors and the proceeds used to collateralize the underlying retrocessional reinsurance arrangements with the two QBE Capital entities, we understand.

The targeted Bridge Street Re 2025-1 Class A notes are designed to provide QBE with a multi-year source of protection, on an industry-loss trigger and annual aggregate basis across a roughly three-year term, from issuance to the end of 2027, we are told.

The cat bond notes will provide QBE territory-weighted retro reinsurance against major industry loss events caused by named storms and earthquakes throughout the United States, Puerto Rico, DC, the US Virgin Islands and Canada, over the risk period.

Being annual aggregate in nature, sources said a franchise deductible will be in place for both of the covered perils, set at $10 billion per industry-loss event, with PCS the reporting agent.

The $250 million of Class A notes Bridge Street Re Ltd. is set to issue will have an initial attachment probability of 2.03%, an initial expected loss of 1.29% and are being offered to cat bond investors with price guidance in a range from 4.25% to 5%, it is said.

Update 1:

We understand that QBE continues to target $250 million of capital markets backed reinsurance from this Bridge Street Re Ltd. Series 2025-1 catastrophe bond issuance, but the price target has been lowered with new spread guidance being offered of between 4% and 4.25%.

Update 2:

QBE eventually secured its targeted $250 million Bridge Street Re 2025-1 catastrophe bond with the notes priced at the low-end of reduced guidance, to pay investors a risk interest spread of 4%.