Foundation Re IV Ltd. (Series 2023-1)

This is the first catastrophe bond to be sponsored by US primary insurance group The Hartford since 2011, having sponsored a string of Foundation Re cat bond deals from 2004.

Now, the company has returned to the catastrophe bond market in search of peak peril catastrophe reinsurance protection on a multi-year basis, from the capital markets.

For its first catastrophe bond issuance in over a decade, The Hartford has established a Bermuda-based issuer named Foundation Re IV Ltd.

Foundation Re IV Ltd. will issue a single tranche of Series 2023-1 Class A catastrophe bond notes that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the issuer and ceding company, with the beneficiaries being Hartford Fire Insurance Co. and subsidiaries, we understand.

Targeting $200 million with this issuance, the Hartford is seeking collateralized US named storm and earthquake protection, across a three calendar year term running the the end of 2026.

The protection will be on an indemnity trigger and per-occurrence basis, we are told, which is a change from its older Foundation Re cat bonds, that had all provided industry loss based protection to the Hartford.

Sources said the notes would attach their coverage at an attachment of $1.1 billion of losses and cover a share up to $1.4 billion,suggesting there is some room for this new cat bond from the Hartford to upsize.

The $200 million of Series 2023-1 Class A notes being issued by Foundation Re IV Ltd. will come with an initial attachment probability of 1.67%, an initial expected loss of 1.36% and are being offered to cat bond investors with spread price guidance in a range from 6% to 6.75%, we’re told.

Update 1:

We’re now told that the issuance remains targeted as $200 million in size, but the spread guidance for the notes has been narrowed, with a range of 6.25% to 6.5% now being offered to investors.

Update 2:

The issuance was finalised to include the targeted $200 million of Series 2023-1 Class A notes being issued by Foundation Re IV Ltd., while the spread pricing was finalised at the low-end of the reduced and narrowed range, to pay investors 6.25%.