Everglades Re II Ltd. (Series 2022-1)

This is the latest catastrophe bond issuance from Florida’s Citizens Property Insurance Corporation, marking the insurer of last resorts’ ninth visit to the cat bond market using an Everglades Re named vehicle since 2012.

Using its Everglades Re II Ltd. special purpose vehicle, Florida Citizens is targeting at least $100 million of capital market backed reinsurance through the issuance of a single tranche of Class A Series 2022-1 notes.

Everglades Re II will issue the notes that will be sold to cat bond investors so the proceeds can collateralize a three-year reinsurance agreement for the sponsor, Citizens.

The notes are designed to provide Florida Citizens with a multi-year source of annual aggregate and indemnity trigger based reinsurance protection against named storms impacting the state of Florida, to May 2025.

The coverage will be for the Personal Lines Account, as we said, so the reinsurance will cover losses to predominantly personal residential, multi-peril homeowner policies with wind that Florida Citizens has issued or assumed.

Everglades Re II Ltd. will issue a $100 million or larger tranche of Series 2022-1 Class A notes, which will have an attachment point of $4.563 billion of losses, covering a share right up until exhaustion at $6.02 billion, we understand.

That’s a particularly tall slice of Citizens PLA reinsurance tower, which gives ample room for this new Everglades Re II cat bond to be upsized, significantly if the market pricing was conducive.

The Everglades Re II Series 2022-1 Class A notes will have an initial attachment probability of 1.07%, an initial expected loss of 0.83% and are being marketed to cat bond investors with price guidance in a range from 6.5% to 7.25%.

That’s a particularly high multiple-at-market, of as much as 8.3 times the expected loss at the mid-point of coupon guidance.

Update 1:

We’re told Florida Citizens target for this new Personal Lines Account focused catastrophe bond has been lifted and up to $200 million of reinsurance is now sought.

At the same time, the price guidance lifted to above the initial range, with the coupon now suggested at a fixed 7.75%.

Update 2:

At pricing, the cat bond issuance achieved the raised $200 million target size for Citizens, although its staff said they would have liked more at a Board meeting.

The coupon priced at the raised above-guidance level of 7.75%.