Swiss Re Insurance-Linked Fund Management

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First Coast Re III Pte. Ltd. (Series 2021-1)

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First Coast Re III Pte. Ltd. (Series 2021-1) – At a glance:

  • Issuer: First Coast Re III Pte. Ltd.
  • Cedent / sponsor: Security First Insurance Company
  • Placement / structuring agent/s: Swiss Re Capital Markets is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Florida named storm, severe thunderstorm
  • Size: $225m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Mar 2021

First Coast Re III Pte. Ltd. (Series 2021-1) – Full details:

Security First Insurance Company is back in the catastrophe bond market to sponsor what will be its fourth cat bond issuance and its second to be issued out of Singapore.

The insurance carrier has returned to the capital markets to add more fully collateralized reinsurance capacity with the assistance of global reinsurer Swiss Re, which acts as a ceding reinsurer and therefore a conduit between Security First Insurance and the cat bond and insurance-linked securities (ILS) investors that will back this deal.

The insurer has registered a new Singapore based special purpose reinsurance vehicle for its fourth cat bond, with First Coast Re III Pte. Ltd. set to issue a single Class A tranche of Series 2021-1 notes.

The current target is for a $100 million tranche of Class A notes to be issued, with the notes set to be sold to investors and the proceeds used to collateralize retrocession agreements between Swiss Re and First Coast Re III Pte, which Swiss Re will then pass on the reinsurance cover to Security First.

We’re told the $100 million of Class A Series 2021-1 notes to be issued by First Coast Re III Pte will be exposed to Florida named storms and severe thunderstorms, across an almost four year term.

Coverage is slated to begin from June 1st 2021 and run through the end of March 2025, giving the cat bond an almost four year term.

Protection will be on an indemnity trigger and cascading, per-occurrence basis, we’re told.

We understand the $100 million of Class A notes have an initial expected loss of 1.86% and that the notes are being offered to cat bond investors with coupon guidance in a range from 6.75% to 7.5%.

Update 1:

This second catastrophe bond issuance has achieved strong execution for its sponsor Security First Insurance, as the offering has upsized by 125% to reach $225 million in size (and coverage for the sponsor), while at the same time the pricing eventually settled down some 16% from the initial midpoint of spread guidance, to offer a 6% coupon.

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