First Coast Re IV Ltd. (Series 2025-1)

Security First Insurance Company has returned to the catastrophe bond market looking to add more fully-collateralized and multi-year catastrophe reinsurance from the capital markets with what will be its sixth First Coast Re cat bond deal.

Bermuda-based special purpose insurance company First Coast Re IV Ltd. will issue two tranches of Series 2025-1 notes, that will be sold to investors and the proceeds used to collateralize protection for the sponsor, we understand.

Security First is again working with global reinsurance firm Swiss Re for its latest cat bond, as it has previously, with the reinsurer set to act as a ceding reinsurer and enter into a retrocession agreement with the issuer, First Coast Re IV Ltd.

Swiss Re will then pass on the collateralized reinsurance protection to Security First, acting as a front to the capital markets for the Florida homeowners specialist.

The target size of the issuance will be for $210 million of notes to be issued across the two tranches, to provide Security First with a source of multi-year and collateralized reinsurance protection against Florida named storms.

Like Security First’s 2023 cat bond, we’re told this 2025-1 cat bond will feature an indemnity trigger and provide its coverage on a per-occurrence and cascading basis.

For Security First this ensures that the reinsurance will cascade down the tower if layers beneath are eroded, meaning less chance of gaps being left in its protection tower.

We’re told that the term of coverage will run from June 1st 2025, with maturity slated for early March 2028, so providing three full hurricane seasons of protection.

First Coast Re IV will issue a $60 million Class A tranche of Series 2025-1 notes that would attach their coverage above $640 million of losses, $40 million plus stated reinsurance, on a first-event basis, sources said.

Which gives the Class A notes an initial attachment probability of 1.41%, an initial base expected loss of 1.30% and they are being offered to cat bond funds and investors with spread price guidance in a range from 7.75% to 8.5%.

A $150 million Class B tranche of notes would attach their coverage above $390 million of losses on a first-event basis, $100 million plus stated reinsurance, we understand.

Giving the Class B notes an initial attachment probability of 2.82%, an initial base expected loss of 2.25%, while these notes are being marketed with price guidance in a range from 8.75% to 9.5%.

Update 1:

We’re told that Security First has raised its target for this First Coast Re IV 2025-1 catastrophe bond, with now from $210 million to as much as $250 million in reinsurance being sought from the deal, at lower than the initially targeted pricing.

The Class A notes are now targeted at between $60 million and $100 million in size, while their price guidance range has fallen to between 7% and 7.75%.

The Class B notes are still $150 million in size, while their price guidance range has also dropped to now between 8% and 8.75%.

Update 2: 

Artemis has learned that the Class A notes are now targeting $100 million in size, and their price guidance range has come down further to between 6.5% and 7%.

The target size for the Class B notes remains at $150 million, while their price guidance range has also declined further to between 7.5% and 8%.

Update 3:

The Class A notes settled at their $100 million size with pricing at 6.5%, so the low-end of reduced guidance and indicating a roughly 20% drop.

The Class B notes settled at $150 million and priced at 7.5%, again the low-end of reduced guidance and a roughly 18% drop.