Easton Re Pte. Ltd. (Series 2020-1)

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Easton Re Pte. Ltd. (Series 2020-1) – At a glance:

  • Issuer: Easton Re Pte. Ltd.
  • Cedent / sponsor: Hamilton Re
  • 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, U.S. earthquake
  • Size: $150m
  • Trigger type: Industry loss index
  • Ratings: NR
  • Date of issue: Dec 2020

Easton Re Pte. Ltd. (Series 2020-1) – Full details:

This will be Hamilton Insurance Group’s first full Rule 144a catastrophe bond and the company has chosen Singapore as the issuance domicile.

Hamilton had registered a special purpose reinsurance vehicle named Easton Re Pte. Ltd. on November 27th 2020.

We understand the eventual issuance from this vehicle will be a multi-year, multi-peril, possibly U.S. wind and quake focused catastrophe bond, which we presume will feature an industry loss trigger, like the firms previous Easton private cat bond.

We believe the beneficiary will be Hamilton’s reinsurance arm Hamilton Re, so the Easton Re Pte. Ltd. Series 2020-1 catastrophe bond will provide it with multi-year retrocession from the capital markets.

Easton Re Pte. will issue a single tranche of Series 2020-1 Class A notes that will be offered and sold to investors, with the proceeds used to collateralize retrocessional reinsurance agreements between the issuance vehicle and a range of Hamilton’s subsidiaries, including its reinsurer Hamilton Re and Lloyd’s managing agent.

Hamilton is targeting at least $150 million of retro protection from the cat bond issuance, with the coverage set to be for losses from U.S. named storms (inc. Puerto Rico, US Virgin Islands, DC) and U.S. earthquakes (inc. DC), across three years, on a state weighted industry loss and per-occurrence trigger basis.

The notes will have an initial expected loss of 1.48% at the base case, we’re told, with the coupon price guidance of the offering set in a range from 4.5% to 5%.

Update 1:

Strong appetite from investors looks set to make the pricing drop for Hamilton’s first full cat bond sponsorship.

The price guidance has been lowered to 4% to 4.5%, so below the initial guidance and indicating a roughly 11% decline in price if it settles at the new mid-point (compared to the original mid-point).

Update 2:

Pricing was eventually fixed at 4%, so the low-end of already reduced guidance and representing a roughly 16% drop in price from the original mid-point. The issuance was not upsized and remained at $150m.

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