Finca Re Ltd. (Series 2025-1)

Canopius Group is back in the catastrophe bond market with its second sponsorship of a Finca Re issuance, looking to renew and upsize its soon to mature 2022 issuance under the same program.

For this second catastrophe bond issuance, Finca Re Ltd. is targeting sale of a $125 million or larger tranche of Series 2025-1 Class A notes, that will be sold to cat bond funds and investors, with the proceeds set to be used to collateralize a source of multi-year retro reinsurance for sponsor Canopius, we are told.

We understand that the Finca Re 2025-1 cat bond will provide its protection to Canopius’ underwriting entities, Canopius Re, Canopius US Insurance, Canopius Managing Agents and its Lloyd’s syndicate 4444, to begin.

The coverage from its second cat bond will span across a nearly three-year term for Canopius, to the end of May 2028, providing it with multi-year protection against losses from US named storms and earthquakes (including Puerto Rico and the US Virgin Islands).

We’re told the protection will be provided on a territory-weighted industry loss trigger basis, while the coverage will be annual aggregate in nature, with an index franchise deductible in-force for qualifying events to be above a threshold of $10 billion to qualify during each annual risk period.

As with the previous Finca Re cat bond, this Series 2025-1 issuance will see named storm risk as the majority of the expected loss, with Florida making up around 45% of the total exposure.

The $125 million, or more, in Series 2025-1 Class A notes that Finca Re Ltd. will issue come with an initial attachment probability of 2.61%, an initial base expected loss of 1.85% and are being offered to cat bond investors with price guidance of 5.25% to 5.75%, Artemis understands.

Update 1:

We’re told that Canopius secured the targeted $125 million of protection from its second catastrophe bond sponsorship, while the Finca Re 2025-1 notes were priced at the bottom of guidance, for a spread of 5.25% to be paid to investors.