Cosaint Re Pte. Ltd. (Series 2021-1)

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Cosaint Re Pte. Ltd. (Series 2021-1) – At a glance:

  • Issuer: Cosaint Re Pte. Ltd.
  • Cedent / sponsor: Universal Property and Casualty Insurance Company (UPCIC)
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: U.S. named storm
  • Size: $150m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Mar 2021

Cosaint Re Pte. Ltd. (Series 2021-1) – Full details:

This is the first catastrophe bond to be sponsored by Universal Insurance Holdings, the Florida headquartered, nationally expansive U.S. primary insurance carrier.

Cosaint means protection in Gaelic (Irish) and its an appropriate name for the first catastrophe bond foray from Universal.

Sources explained to us that Universal is sponsoring its first catastrophe bond to secure multi-year, collateralized reinsurance protection against losses from U.S. named storms, so hurricanes and tropical storms, for its Universal Property and Casualty Insurance Company (UPCIC) and any direct subsidiaries.

Hence, Universal Property and Casualty Insurance Company (UPCIC) is the cedent for the coverage and we understand any existing or future subsidiaries can also benefit from the reinsurance coverage provided by the Cosaint Re Pte. catastrophe bond deal.

Universal has chosen to issue its first cat bond out of Singapore, with special purpose reinsurance vehicle Cosaint Re Pte. Ltd. established there.

Cosaint Re Pte. Ltd. will seek to issue a single tranche of Class A notes, the proceeds of which sale will be used to collateralize an underlying reinsurance agreement between Cosaint Re and UPCIC.

The reinsurance protection will cover UPCIC against losses from named storms, so tropical storms and hurricanes, across all U.S. states where the company has exposure, which includes east and northeast coast states, Gulf Coast states where UPCIC operates and also Hawaii.

However, we’re told that the vast majority of the exposure held within this Cosaint Re catastrophe bond will be in the state of Florida, Universal’s home.

The protection offered by the catastrophe bond will be on an indemnity reinsurance and per-occurrence basis, across a three-year term.

Cosaint Re Pte. is seeking to issue at least a $100 million Class A tranche of Class A notes, with the coverage attaching at just over $1.1 billion of UPCIC named storm losses in the first risk period, we’re told.

We understand that this equates to an initial expected loss of 2.97% for the notes and that they are being offered to catastrophe bond investors with coupon in a guidance range from 9.5% to 10.25%.

Update 1:

The Cosaint Re Pte. 2021-1 catastrophe bonds target size has been raised to $150 million, while at the same time the price guidance has been reduced to a new range of 9.25% to 9.5%.

Update 2:

Price guidance was finally fixed at the low-end of already reduced guidance, at 9.25%, representing a roughly -6.4% drop from the initial mid-point.

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