Foundation Re IV Ltd. (Series 2027-1)

US primary insurance group The Hartford has returned to the catastrophe bond market, initially seeking $280 million of multi-peril reinsurance protection from what will become the eighth cat bond we have seen from the company since it  brought to market the first in its series of Foundation Re cat bond deals back in 2004.

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

Foundation Re IV Ltd. is offering investors a single tranche of Series 2027-1 Class A notes, with the proceeds from their sale set to be used to collateralize a reinsurance agreement between the issuer and ceding company, with the beneficiaries being Hartford Fire Insurance Co. and subsidiaries, sources explained.

The initial target is to secure at least $280 million of protection with this Series 2027-1 issuance, with the targeted reinsurance being fully-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 2030.

This latest Foundation Re IV cat bond from The Hartford will feature an indemnity trigger and provide coverage on a per-occurrence basis, just like its last.

The initial attachment point for the coverage will be at $1.3 billion of losses, covering a share up to $1.7 billion, giving room for this new cat bond from the Hartford to upsize to fill this $400 million layer should the sponsor choose.

The currently $280 million of Foundation Re IV Ltd. Series 2027-1 Class A notes that are being offered will come with an initial attachment probability of 1.93%, an initial base expected loss of 1.56% and they are being offered to cat bond investors with spread price guidance in a range from 3% to 3.5%, we understand.