Citrus Re Ltd. (Series 2025-1)

Heritage Insurance Holdings, Inc. has returned to the catastrophe bond market aiming to secure $200 million or more in US named storm reinsurance protection for southeastern states and Hawaii from this Citrus Re Ltd. (Series 2025-1) issuance.

For its tenth Citrus Re cat bond, Heritage is expanding the covered area to include Hawaii for its Zephyr Insurance underwriting company, while also covering risks in Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina for its Heritage Property & Casualty Insurance Company and Narragansett Bay Insurance Company (NBIC) entities.

Citrus Re Ltd., Heritage’s special purpose insurer (SPI) in Bermuda, will aim to issue two tranches of notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements for the ceding companies benefit.

This Citrus Re Series 2025-1 cat bond notes is targeted to provide Heritage and its subsidiaries with a multi-year source of southeast US named storm reinsurance protection and Hawaii named storm reinsurance protection, on an indemnity trigger and per-occurrence basis, across a three-year term from June 1st 2025 to May 31st 2028, we understand.

A $100 million tranche of Class A notes will cover named storm risks across the southeast states and would attach at $700 million of losses and exhaust their reinsurance coverage at $900 million, giving them an initial attachment probability of 1.75%, an initial expected loss of 1.57% and these notes are being offered to investors with spread guidance in a range from 8% to 8.75%, sources said.

A similarly $100 million Class B tranche of notes will cover named storm risks in Hawaii only, with an attachment point at $290 million of losses and exhaust their reinsurance coverage at $495 million, which gives them an initial attachment probability of 1.44%, an initial expected loss of 1.33% and these notes are being offered to investors with spread guidance in a range from 4.5% to 5%, we understand.

We also understand there is stated reinsurance related to the two tranches, so the effective attachment points may be different to those mentioned above.

Update 1:

Heritage Insurance is now targeting lower pricing for its latest catastrophe bond issuance, which remains at $200 million in target size at this stage, we have learned.

The Class A notes remain at $100 million in size, but we’re now told that their price guidance has fallen to between 7.75% and 8%.

The Class B tranche also remain at their initial $100 million size, but with their price guidance now fixed at the low-end of 4.5%.

Update 2:

Heritage secured the targeted $200 million of reinsurance from its latest Citrus Re Ltd. (Series 2025-1) catastrophe bond issuance.

The Class A notes remained at $100 million in size and priced at 7.75%.

The Class B tranche also remained at their initial $100 million size and priced at 4.5%.