Foundation Re IV Ltd. (Series 2026-1)

This new issuance will be the seventh catastrophe bond to be sponsored by US primary insurance group The Hartford since it  brought to market the first in its series of Foundation Re cat bond deals back in 2004.

Notably, this is the second cat bond from The Hartford in two years, as the insurer now looks to begin layering reinsurance protection and staggering maturities from the capital markets again, having previously had a gap of over a decade since the prior deal in 2011.

The Hartford is for the second time using Bermuda-based special purpose insurer (SPI) Foundation Re IV Ltd. as the issuing vehicle for its latest catastrophe bond.

Foundation Re IV Ltd. is targeting issuance of a single tranche of Series 2026-1 Class A 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 have been told

The goal is to secure at least $270 million of protection with this issuance and the Hartford is specifically seeking collateralized US named storm and earthquake protection, including for D.C. and Puerto Rico, across a four calendar year term running to the end of 2029. We understand this protection will be on an indemnity trigger and per-occurrence basis.

The notes are expected to attach their coverage after $1.6 billion of losses, covering a share up to $1.9 billion, giving some room for this new cat bond from the Hartford to upsize a little to fill this $300 million layer.

The currently $270 million of Series 2026-1 Class A notes that Foundation Re IV Ltd. is set to issue will come with an initial attachment probability of 1.35%, an initial base expected loss of 1.18% and they are being offered to cat bond investors with spread price guidance in a range from 3.75% to 4.25%, sources said.

Update 1:

We’re told that The Hartford’s target for this Foundation Re IV Series 2026-1 catastrophe bond remains to secure $270 million of reinsurance protection.

However, the price guidance for the Class A notes has been lowered, to a revised range of between 3.25% and 3.75%.

Update 2:

We understand that The Hartford has successfully priced its new Foundation Re IV Series 2026-1 catastrophe bond to provide it the targeted $270 million of reinsurance protection.

The Class A notes were priced to pay investors an initial risk interest spread of 3.5%, so below the initial guidance range.